Practical analysis for investment professionals

High Yield

Distressed Debt: Which Sectors Offer Value?

The current environment may be the best that credit investors have seen in at least a generation.

Stressed and Distressed Credit: Risk and Reward

As Warren Buffett said, “You only find out who is swimming naked when the tide goes out.” Well, the tide is going out and as businesses refinance at higher rates, default rates and distressed exchanges are likely to increase.

Corporate Bonds after a Spin-Off: Consider the Covenants

Whatever their motivations, spin-offs can have a dramatic effect on the performance of the associated corporate bonds, so it is crucial that fixed-income investors conduct the necessary analysis. Nathan N.J. Grant, CFA, has some advice.

Book Review: High Yield Debt

High Yield Debt succeeds as a concise and thorough primer on the speculative-grade debt market, including not only high-yield bonds but also leveraged loans and other related asset types. The author, who manages a credit hedge fund, presents sound conclusions on such controversial topics as the impact of exchange-traded funds on market volatility. The book is an invaluable resource for its target market of institutional decision makers.

Edward Altman: The Benign Credit Cycle Is in Extra Innings

Edward Altman says the benign credit cycle is in “extra innings,” but the metaphorical relief pitchers — central bankers — are running out of gas.

The Altman Z-Score in Action: Is a Bubble Building in Global Credit Markets?

Edward Altman anticipated the 2008 credit meltdown in 2007. He believes another bubble is building in credit markets today. He explains why in the last installment of his interview with Larry Cao, CFA.

The Altman Z-Score after 50 Years: Use and Misuse

It's been nearly a half century since Edward Altman developed his Z-score model for assessing a company's potential for bankruptcy. In the second part of his interview with Larry Cao, CFA, he discusses how the model is applied and misapplied today.

The Altman Z-Score in Edward Altman’s Own Words

Edward Altman recently spoke with Larry Cao, CFA, in Hong Hong about the Altman Z-score, its original inspiration, evolution, use and misuse, as well as the current credit situation around the world. In this first installment, Altman discusses how the Z-score model was developed and how its latest iterations have built on that initial foundation.

Marty Fridson Deflates the High-Yield Bond Balloon (Podcast)

Over time, the annualized return of a duration-targeting, investment-grade corporate bond portfolio will nearly match its initial yield. A high-yield bond portfolio’s performance is not similarly predictable, according to Martin Fridson, CFA.

Book Review: Inside the Yield Book: The Classic That Created the Science of Bond Analysis

The third edition of Inside the Yield Book builds on the previous editions with valuable insights into duration targeting. The authors convey their mathematically elegant findings with the same clarity and accessibility that characterized the writing of Leibowitz and Homer more than 40 years ago, before abstruse formulas began to permeate fixed-income analysis.

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