|
|
|
|
| BondsOnline.com: instant access to and extensive coverage of over 3.5 million stocks, bonds, indexes and other securities covering major and emerging markets and exchanges across the globe. |
|
|
| Bonds Online |
|
|
| 5/10/2013Market Performance |
| Municipal Bonds |
|---|
|
S&P National Bond Index
|
3.00% |
|
|
S&P California Bond Index
|
2.96% |
|
|
S&P New York Bond Index
|
3.13% |
|
|
S&P National 0-5 Year Municipal Bond Index
|
0.70% |
|
|
| S&P/BGCantor US Treasury Bond |
400.09 |
|
| More |
|
| Income Equities: |
|---|
| Preferred Stocks |
|---|
|
S&P U.S. Preferred Stock Index
|
848.03 |
|
|
S&P U.S. Preferred Stock Index (CAD)
|
636.26 |
|
|
S&P U.S. Preferred Stock Index (TR)
|
1,701.05 |
|
|
S&P U.S. Preferred Stock Index (TR) (CAD)
|
1,276.26 |
|
|
| REITs |
|---|
|
S&P REIT Index
|
174.07 |
|
|
S&P REIT Index (TR)
|
425.30 |
|
|
| MLPs |
|---|
|
S&P MLP Index
|
2,469.58 |
|
|
S&P MLP Index (TR)
|
5,428.50 |
|
|
See Data
|
|
|
|
 |
|
|
|
|
|
|
Bank On Bankruptcy |
Forbes.com - Sept. 21, 2009 - by Matthew Craft
More companies are struggling with their debts. But some defaults are better than others.
Could it be a disaster in the making? At the same time Americans are stashing more of their savings in corporate bonds and helping to drive down companies' borrowing costs, a growing portion of those same companies are failing to pay their bills, usually a sign of impending bankruptcy.
Even though junk bonds have returned a whopping 46% this year, the rating agency Standard & Poor's says 10.4% of companies with speculative-grade ratings have bilked bondholders and defaulted on their debt in the last 12 months. It's a trend expected to last: Bank of America recently estimated that 40% of them will default by 2013.
In effect, investors seem to be rushing onto a leaky investment. Sail aboard the majestic Lusitania before the ship--or at least 40% of it--sinks.
But a focus on the numbers hides some significant changes in credit markets and disagreement over how the recession will play out. Defaults can save companies from insolvency or push them into it. So-called distressed exchanges reduce debt, help companies stay afloat and still count as defaults. A company convinces creditors to swap bonds for new notes or cash at a discount. Bondholders take a hit, but they don't have to fight over their claims in bankruptcy court.
In its default tally this year, S&P counts as many of these distressed exchanges (74) as missed interest payments. Such debt swaps by Freescale Semiconductor, Harrah's Entertainment, CIT Group ( CIT - news - people ) and Ford Motor ( F - news - people ) made for some of the largest defaults this year. And all have managed to avoid bankruptcy thus far.
CIT, for instance, paid off 59% of its $1 billion in notes due Aug. 17 at 87.5 cents on the dollar. In a bankruptcy, bond holders typically get 50 cents on the dollar, though the amount varies widely depending on where the bonds rank in the company's
S&P expects the default rate to hit 14% next year, as a lasting recession drowns companies struggling under too much debt, especially those owned by private equity firms. S&P's estimate is widely cited, but many debt analysts and money managers think it's too pessimistic. Researchers at Citigroup say that with the bankruptcies of General Motors, Chrysler and Charter Communications ( CHTR - news - people ), the largest threats have already passed. An economic rebound, falling borrowing rates and a surge in new issues may also temper defaults.
Junk-rated companies have raised $76 billion on the U.S. bond market this year, up 146% from the same period in 2008, according to Thomson Reuters. Much of the cash has been used to pay down more expensive debt. In a note to clients last Friday, Barclays' credit strategists wrote that "enough capital has been raised that default rates should drop below 10% next year."
|
|
|
|
|
|
| Partner Market Place |
|
|
|
| Stuff to look at |
Yield and Income Newsletter: A must have for income investors. subscribe NOW
S&P Commentary and Newsletters: S&P
|
|
| BondsOnline Advisor |
Income Security Recommendation January 2013 Issue.
Keep up with monthly, in-depth coverage of fixed income market strategies, commentary, and insights as seen by our sources. Sign up for the free BondsOnline Advisor now!
Unsubscribe here [+] |
|
|
|
|
|
|
|
|
