iHeartRadio owner files for bankruptcy

Re:iHeartRadio owner files for bankruptcy by toomuchtodo on Thursday March 15, 2018 @12:03PM (#16594009)

When you require larger returns, you're willing to accept higher levels of risk (think of all of the pension funds with obligations where they calibrated their returns at 8% but are falling far short of that [1]). The debt for these sorts of transactions is referred to as "junk bonds" or high yield debt [2].

Sidenote: It's very important to understand risk when comparing returns, as returns must be risk adjusted to be properly compared. For example, 5% returns on bonds and 5% returns on equities are not the same based on the underlying risk of the asset class.

[1] https://www.bloomberg.com/news/articles/2017-08-02/5-is-the-...

[2] https://en.wikipedia.org/wiki/High-yield_debt

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Re:iHeartRadio owner files for bankruptcy by Jesus_Jones on Thursday March 15, 2018 @12:53PM (#16594470)

it's still hard to understand the motivation, because these husks of companies with large debts (like toys r us) keep ending up defaulting on their loans. so at the least, the people that make those big loans lost. I pay moderate attention to my 401k, but I notice (at least when I look :-)) when I have a giant loss. How can these bond or loan companies afford to lose so much and stay in business?

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Re:iHeartRadio owner files for bankruptcy by Spooky23 on Thursday March 15, 2018 @03:34PM (#16595885)

Not all of the stakeholders lose. The suppliers, employees and vendors of the company lose.

But the entities that write these loans make their money in different ways and may not actually lose as much as you think, or at all!

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Re:iHeartRadio owner files for bankruptcy by toomuchtodo on Thursday March 15, 2018 @01:23PM (#16594761)

> How can these bond or loan companies afford to lose so much and stay in business?

Scale. The same way VCs only count on one or two wins to pay for the rest of the losses.

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