The State of the High Yield Bond Market: Overshooting or Return to Normalcy?

13 Pages Posted: 7 May 2004

See all articles by Martin S. Fridson

Martin S. Fridson

Lehmann, Livian, Fridson Advisors LLC

Abstract

During the early 80's, junk bonds played an important role in financing middle market companies. This article furnishes evidence that high-yield bonds are returning to the middle market after a long period of serving as the handmaiden of the M&A market. Noninvestment-grade bonds have proven their merit not only as a diversifying asset but also in a risk/reward comparison with other classes of securities. Default rates have declined markedly, and spreads versus Treasurys have stabilized. The current boom in high-yield issues is not evidence of overheating but rather a continuation of the high-yield market's longer-term integration into the investment mainstream.

Suggested Citation

Fridson, Martin S., The State of the High Yield Bond Market: Overshooting or Return to Normalcy?. Journal of Applied Corporate Finance, Vol. 7, No. 1, Spring 1994. Available at SSRN: https://ssrn.com/abstract=543882

Martin S. Fridson (Contact Author)

Lehmann, Livian, Fridson Advisors LLC ( email )

136 E 57th Street
Suite 501
New York, NY 10022
United States

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