Search

More Investors are taking a chance buying Junk Bonds (Lending Money to Bad Companies)



U.S. Junk Bonds (Bonds of companies who has bad credit and nearing bankruptcy) Set $329.8 Billion Sales Record Amid Yield Hunt (Interest rate investors are paid for buying the company Bonds)


Companies with large Sales and Earnings declines were emboldened to borrow billions of dollars to help ride out the pandemic. Some of the most beat down and battered Companies, including airlines, hotels and even cruise operators, were able to tap investors for financing (Borrow Money), sometimes paying double-digit coupons (Double Digit Interest Rates).


These troubled, Poor Credit and fundamentally Bad companies are borrowing more money from investors than ever before, the companies are looking to have long term loans in a attempt to spread the debt out over many years.


Investors are so Desperate to make Returns on Investments that they are willing to lend money to these bad companies at lower and lower interest rates.


In the past a Bad Company would have to pay High Double Digit to sell there Junk Bonds, now the interest they have to pay for borrow money coming down.




The flow of refinancings is expected to continue through September and into October. Issuers have pulled forward deals to get ahead of the uncertainty around the November presidential election and a possible second wave of Covid-19.



13 views0 comments

Recent Posts

See All