The looming wave of bankruptcies is unlikely to be kind to bondholders. And they have only themselves to blame.
Rather than receiving the historical average recovery of 42 cents on the dollar in a default, owners of a third of high- yield, high-risk bonds rated B+ or lower may get no more than 10 cents, according to New York-based Fitch Ratings.
Here’s the headline: “Bondholders Lucky [emphasis ours] to Get 10 Cents in Looming Defaults”
Why does it seem like “lucky” is the last thing these bondholders would think to call themselves? Then again, most successful investors are the “happy go lucky” type. (Be sure to listen for the laugh solo midway through the tune – seriously…):[youtube http://www.youtube.com/watch?v=A_yOWAcToIE&hl=en]
Bondholders Lucky to Get 10 Cents in Looming Defaults