Chapter

Junk Bonds Then and Now

Glenn Yago and Susanne Trimbath

in Beyond Junk Bonds

Published in print May 2003 | ISBN: 9780195149234
Published online November 2003 | e-ISBN: 9780199871865 | DOI: http://dx.doi.org/10.1093/0195149238.003.0002
Junk Bonds Then and Now

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This chapter first presents a brief history of the high‐yield securities market in the USA since the 1970s. It then discusses the etymology of the term ‘junk bonds’, and goes on to describe critical events in the high‐yield market from the period 1989–1990 – which has often been characterized as the time of the beginning of the end for the market. The next part of the chapter discusses the capital access and high‐yield financial innovations that led to the development of the high‐yield securities market from the late 1970s, giving a comparative breakdown of the distribution of the main uses of high‐yield proceeds in the periods 1983–1989 and 1990–1999, and a year‐by‐year breakdown of the use of proceeds from 1983 to 2000. Last, the junk bond situation in 2000–2002 is contrasted with that in the 1990s, giving comparative year‐by‐year data for the distress ratio, the percentage of Rule 144A (which permits private placements to be freely traded among qualified institutional buyers (QIBs)) new issues, and high‐yield default rates from 1990 to 2002; data on high‐yield supply for 2000–2002 are included.

Keywords: capital access; distress ratio; high‐yield default rate; high‐yield markets; high‐yield securities; high‐yield supply; history; junk bonds; USA; uses of high‐yield proceeds

Chapter.  7065 words.  Illustrated.

Subjects: Financial Markets

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