Junk the fear

Junk bonds: Junk bonds are exposing the excesses of the credit boom. So, at least, it seems. Creditors’ recoveries after company defaults are heading downwards below 20% of face value. At half the accepted norm, that sounds frightening. But in fact it’s in line with recovery rates in other downturns. And for investors reasonably comfortable the worst of the credit crunch is over, other factors make high yield bonds look much less scary. The 40%-plus recovery figure is a rule of thumb - and an ...