[OPE-L:6152] Re: junk debt?

From: Fred B. Moseley (fmoseley@mtholyoke.edu)
Date: Sun Nov 04 2001 - 09:01:42 EST

On Sat, 3 Nov 2001, Rakesh Bhandari wrote:

> Fred, not quite sure of what one is to make of this: despite the US feds 
> efforts to decrease both short term and now long term rates, junk debt 
> borrowing costs have risen considerably; the spread over comparable Treasurys 
> has risen about 3x since mid 1998. There has been a squeeze on the supply of 
> credit  of highly leveraged businesses and companies--see WSJ 10/29/01, p. C1.

Rakesh, this seems pretty clearly to result from increasing concern about
the world economy and the prospects for survival of high-risk firms.
I imagine those spreads will continue to rise.


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