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| 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. |
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| Bonds Online |
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| 5/10/2013Market Performance |
| Municipal Bonds |
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S&P National Bond Index
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3.00% |
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S&P California Bond Index
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2.96% |
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S&P New York Bond Index
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3.13% |
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S&P National 0-5 Year Municipal Bond Index
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0.70% |
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| S&P/BGCantor US Treasury Bond |
400.09 |
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| Income Equities: |
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| Preferred Stocks |
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S&P U.S. Preferred Stock Index
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848.03 |
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S&P U.S. Preferred Stock Index (CAD)
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636.26 |
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S&P U.S. Preferred Stock Index (TR)
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1,701.05 |
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S&P U.S. Preferred Stock Index (TR) (CAD)
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1,276.26 |
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| REITs |
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S&P REIT Index
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174.07 |
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S&P REIT Index (TR)
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425.30 |
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| MLPs |
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S&P MLP Index
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2,469.58 |
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S&P MLP Index (TR)
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5,428.50 |
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See Data
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The Falling Failure Rate
The outlook for debt markets brightens. |
Forbes.com - Oct. 22, 2009 - by Matthew Craft
A menace to your new bond investment was just sliced in half. The rating agency Standard & Poor's chopped its default-rate forecast for junk bonds on Wednesday, thanks to a sharp drop in borrowing costs and a reopened market for corporate credit.
S&P says companies with heavy debt burdens now stand a better chance of survival, which means more should stick around to pay interest payments on their bonds. It now expects a 6.9% default rate by September of next year, a steep fall from the current 10.8%. The rating agency had earlier projected a 13.9% forward rate. Retail investors who have plowed their savings into bond funds this year should sleep a little more comfortably.
The rating agency's fixed-income researchers pointed to a mix of reasons for cutting their forecast: falling interest rates, investors' willingness to buy risky debt and companies seizing on these two trends to refinance with new bonds. Those junk bonds at the distressed level make up 18.7% of the market, a 16-month low.
A sense among investors that the worst has passed opened the bond markets to companies from the lowest ranks on the credit-rating scale. Starting in September, companies such as Beazer Homes USA ( BZH - news - people ), Delta Air Lines ( DAL - news - people ) and MGM Mirage ( MGM - news - people ) managed to sell new CCC-rated notes.
Even the soaring default rate hasn't been as bad as it appeared. A default is often a prelude to bankruptcy but not always. This year many companies have asked their investors to swap bonds for new notes at a discount. These distressed-exchanges count as defaults, although they buy companies time to fix their balance sheets. Bondholders take a hit but avoid fighting over their claims in bankruptcy court. (See "Bank on Bankruptcy").
Or at least they delay it. Take CIT Group ( CIT - news - people ), the commercial lender struggling to manage a pile of debt. In August, it convinced many investors to a bond swap, which shaved off $75 million in debt. CIT returned to its bondholders early this month with a proposal to cut at least $5.7 billion in debt in exchange for notes and preferred stock. It also asked them to approve what's known as a "prepackaged bankruptcy," basically, a plan for an orderly reorganization after the company files for Chapter 11.
Other large companies, such as Freescale Semiconductor ( FSL - news - people ), Harrah's Entertainment ( HET - news - people ) and Ford Motor ( F - news - people ), have pulled off debt swaps, making for some of the largest defaults this year. None of these three have landed in bankruptcy yet.
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| Stuff to look at |
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| BondsOnline Advisor |
Income Security Recommendation January 2013 Issue.
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