The fund's collapse triggered deep losses in the junk bond
category and left fund shareholders unable to redeem money.
issuance in the fourth quarter fell to $13 billion from $30 billion in the third quarter and around $18 billion in the fourth quarter of last year, making it the weakest quarterly performance since 2011, said Firth.
Hayden, D-Los Angeles, said he was particularly concerned with contributions from Apollo Advisors, a Century City-based investment company formed by some of the principals who had worked for Drexel Burnham Lambert during its days of selling junk bonds
Part of Fairfield's rapid growth in the late 1970s and 1980s came through junk bond
financing provided by Mike Milken and Drexel Burnham Lambert.
Recognizing changes in the underlying value of investments, Lincoln has increased its holdings of Treasury bonds and AAA securities from 17 percent to 43 percent of its portfolio since 1987 and reduced its junk bond
Milken discovered, about 10 years ago, that these so-called "junk bonds
" really weren't all that risky - that the extra return paid out by junk bonds
far exceeded the likely losses from a default.
Third Avenue Management specializes in risky bonds, and its Focused Credit Fund was heavily concentrated in junk bonds
, subordinated debt and unrated securities of distressed companies.
are risky investments, but have speculative appeal because they offer much higher yields than safer bonds.
Moody's has downgraded three nationalised Spanish banking groups, sending their debt deeper into junk bond
territory on fears that private investors may get burned in case of trouble.
While disruptions in global markets in 1998 raised risk premiums on junk bonds
and bank loans and threatened a seizing-up in financial markets, ultimately they did not derail the flow of credit, especially to smaller businesses.
In turn, Milken and his brokerage firm, Drexel Burnham Lambert, were looking for funds to create their dreamed-of junk bond
funds attracted huge amounts of investor capital in the 1980s.
It said the holdouts were mostly investors who had purchased bonds at sharp discounts after the junk bond
market had crashed.
Concerns Regarding Junk Bond
Market Exceed 'Credit Crunch' Worries
It sure seems like it, because junk bond
issuance soared to $26 billion in November more than double October's levels, according to Bloomberg data.