The investor was bamboozled into buying junk bond .
Michael Milken will always be synonymous with the term ”junk bond king.
Yet, with a 20% average yield, junk bonds could provide nice returns, even in that scenario.
Traditional distress funds have drifted reluctantly into risky, but still solvent, junk bonds and high-yield loans to keep business ticking along.
Just like junk bonds, another once-misused financial instrument, many of the new derivatives will be back, for no better reason than that they are useful.
They offer a lucid explanation of how the debt markets evolved from junk bonds to securitised loans, changing the types of deals that private-equity firms were able to finance.
