Forum Archive Index - April 2003

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi hugh,

>
> 
> All there is is an unsubstantiated allegation by someone 
> who can type QWERTY that they  are "junk bonds" 
>which I'm pretty sure is rubbish. Feltex are very
> substantial carpetmakers and the other NZ substantial 
> carpetmaker Cavalier is hardly in the junk bond category.
>
>

I've never understood the term 'junk bonds' to mean that the investment is no 
good.  All 
it means is that the level of security is below what you would expect from a 
bank deposit.  
A 'junk bond' can still be a good investment

Our mate Warren in the USA is right into buying junk bonds on the secondary 
market at 
the moment.  A junk bond might be no good, but alternatively it might be that 
the issuer 
of the bonds does not have a suitable credit rating to issue anything else.   
It is possible 
to have a substantial respectable company that issues junk bonds.  A  10.25% 
interest 
rate sounds like a junk bond interest rate to me.   But exactly what the risk 
is with any 
particular bond issue, like this one,  is something that you will need 
investigate.

IIRC Feltex ended up in the hands of an Australian conglomerate ( BTR Nylex ?). 
  But 
once they went off shore I ceased to follow them so that info could be out of 
date.

SNOOPY


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