Junk bonds prove there's nothing magical in a Aaa bond rating.
Sentiment: NEGATIVE
In principle, junk bonds are basically useful, but they are used excessively and irrationally, notably in takeovers.
The credit quality of junk bonds varies widely.
The rating agencies historically actually did a pretty good job rating regular bonds.
If you are prepared for some risk, junk bonds pay about 5%, but they tend to get whacked when interest rates rise. Same with lower-yielding but higher-quality corporate bonds.
I did the thing with bonds, which was about 30 million dollars, and didn't get none of the money on them.
It's not a stretch to say the whole financial industry revolves around the compass point of the absolutely safe AAA rating. But the financial crisis happened because AAA ratings stopped being something that had to be earned and turned into something that could be paid for.
We're only one of a few states that have maintained our Triple-A bond rating from the major rating agencies.
There's not a doubt in my mind that you will see a spate of municipal-bond defaults.
The once-unthinkable loss of the AAA rating will constitute a further hit to already fragile business and consumer confidence.
Equities are boring; bonds are disgusting.