junk bond


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Related to junk bond: Investment grade bond

junk bond,

a bondbond,
in finance, usually a formal certificate of indebtedness issued in writing by governments or business corporations in return for loans. It bears interest and promises to pay a certain sum of money to the holder after a definite period, usually 10 to 20 years.
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 that involves greater than usual risk as an investment and pays a relatively high rate of interest, typically issued by a company lacking an established earnings history or having a questionable credit history. Junk bonds became a common means for raising business capital in the 1980s, when they were used to help finance the purchase of companies, especially by leveraged buyoutsleveraged buyout,
the takeover of a company, financed by borrowed funds. Often, the target company's assets are used as security for the loans acquired to finance the purchase.
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; the sale of junk bonds continued to be used in the 1990s to generate capital. See also Milken, MichaelMilken, Michael Robert
, 1946–, American financial executive, b. Van Nuys, Calif. Nicknamed the "junk bond king," he was an executive at Drexel Burnham Lambert, Inc., where he transformed corporate takeovers and financing by the use of high-yield junk bonds.
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References in periodicals archive ?
First Executive didn't invent interest-sensitive policies any more than Milken invented junk bonds, but it stepped to the forefront.
Fairfield was even touted as a Drexel success story at a 1983 Predators Ball in swanky Beverly Hills, the annual gathering of Milken's junk bond legions.
in Kokomo also has aimed to diversify its, portfolio with a junk bond fund, says Louis Schmitt, senior vice president and chief financial officer.
By convincing many investors that junk bonds were sound, Milken created a hug market for the bonds of small, entrepreneurial companies that had previously been despised by the capital markets.
Indeed, even the most casual examination of Lincoln's junk bond purchases reveals a number of Mike Milken's greatest hits, together with some of his biggest dogs.
Interest was suspended on the bonds as Warburg Pincus sought to refinance hundreds of millions of dollars' worth of high-yield, high-risk junk bonds floated with the help of convicted market manipulator Michael Milken.
At the same time, the health of the junk bond market appears to be an emerging issue as 51% of respondents expressed concern over the current state of junk bonds.
And that in turn will impact the future performance of bond prices, including junk bond prices.
That's troublesome since the stock market often moves in sympathy with the junk bond market because rising borrowing costs crimp corporate profits.
Some purists will object to this overseas resurrection of the junk bond industry's Marconi, pointing out that he is, in the narrow, technical sense of the word, a "crook.
Much of the space was left empty after the bankruptcy of Integrated Resources, a junk bond firm.