Like junk food, these are bonds that make you feel momentarily good but can have nasty side-effects afterwards. As the name implies, they are not the crème de la crème on offer to investors in the bond world. More like curdled crème. Junk bonds should carry a high-risk health warning. In order to compensate investors for this higher risk, the borrowers who issue them (companies that are on a shaky financial footing) pay a higher rate of interest than the more solid, safe ones. But buyer beware (caveat emptor for all you posh Latin speakers). The sexier it looks the riskier it usually is.
Me, I do not have the bottle to put my money in this type of investment. Other more swashbuckling types who like to take big bets may find these attractive. More seriously, these bonds have poor credit ratings .
Me, I do not have the bottle to put my money in this type of investment. Other more swashbuckling types who like to take big bets may find these attractive. More seriously, these bonds have poor credit ratings .
