High-Yield bonds: The looking glass

High-Yield bonds: The looking glass


By Karen Schwartz For high-yield investors, Mexican glassmaker Vitro’s messy debt restructuring was a sharp reminder of the perils of dabbling in sub-investment grade paper. In April, the company finally put an end to the wrangling over its $1.2 billion 2009 default. A four-year legal battle was probably not what most investors had in mind when they bought the paper. And as the tussle dragged on, bond investors talked of charging a Vitro premium for junk bonds. Yet, despite its warning to investors, Vitro has not put fund managers off investing in sub-investment grade debt. On the contrary, junk-rated companies from Latin America have roughly doubled their annual debt sales since the

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