Re:Fed to buy junk bonds, lend to states in fresh virus support
by A4ET8a8uTh0 on Thursday April 09, 2020 @05:46PM
(#22827540)
The fallen angels is an interesting construct. At the end of the day, their ratings are considered junk. Classifying them as crap is appropriate. Without serious infusion of cash there is a notable nonzero change they would fail. What is the point of those ratings if they are being ignored at the first sign of trouble?
[ Parent
| on HN ]
Re:Fed to buy junk bonds, lend to states in fresh virus support
by ipsum2 on Thursday April 09, 2020 @06:00PM
(#22827648)
> Without serious infusion of cash there is a notable nonzero change they would fail
This is an exaggeration. Many companies purposely have junk bonds so they can borrow more money at a low rate, compared to investment grade bonds.
Re:Fed to buy junk bonds, lend to states in fresh virus support
by gruez on Thursday April 09, 2020 @09:45PM
(#22829108)
>Many companies purposely have junk bonds so they can borrow more money at a low rate, compared to investment grade bonds.
What? Conventional wisdom says that risky (junk) bonds would have higher yields (aka costs for the borrower) than safer (investment grade) bonds.
Re:Fed to buy junk bonds, lend to states in fresh virus support
by A4ET8a8uTh0 on Thursday April 09, 2020 @06:11PM
(#22827737)
Yes. Their purpose is to have funding. Do you think they pay higher interest rates out of the goodness of their hearts? I am not sure what you are arguing here.
Re:Fed to buy junk bonds, lend to states in fresh virus support
by foota on Thursday April 09, 2020 @06:32PM
(#22827893)
There's a difference between a company that has always been junk and a company that is only rated junk because of the current crisis?
Re:Fed to buy junk bonds, lend to states in fresh virus support
by elliekelly on Thursday April 09, 2020 @06:08PM
(#22827720)
Recent history has shown that the ratings are calculated as a function of politics, market psychology, and the rating agency’s best hunch.