CIF - Junk Bonds 'Read Like A Bond But Trade Like A Stock'
It takes 35 years in the trenches of the junk bond market for an investment professional to come up with a one-liner that summarizes the volatility of low-grade debt: “It reads like a bond, but trades like a stock.”
As junk bond spreads were blowing out in January 2016, the oil price was collapsing, and I sought the advice of a seasoned bond trader on some legacy junk bond positions for a new client. It looked like those low-rated bonds were about to go to high-yield heaven. The bond trader, Mike Lanier, was remarkably calm.