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SPDR Barclays High Yield Bond ETF Message Board

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  • varia_nada varia_nada Nov 3, 2011 11:48 AM Flag

    will JNK do well?

    Dalila: Appreciate your response. You sound knowledgable about junk bonds, please write more in the future. I bought 500 shares at 40.3 a few months ago to collect the divy for long term supplemental income. Thanks again.

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    • If you don't need the dividends at the moment you can use Dividend reinvestment to accumulate more JNK. I do that and I have more for when I need the money. Compound interest works very well.

      • 2 Replies to mayhem991
      • Speaking of the default rate this came out today (see below) First rise in almost two years. Still, based on junk's spread with Treasuries, current prices are pricing in a default rate closer to 6% and unless you believe we are headed for negative GDP and a nasty recession in the the next year or so, junk is still very attractively priced


        >>>>>Nov 3, 2011
        12:17 PM Default Rate Still Low, Just a Bit Higher Now – S&P
        Posted by Michael Aneiro

        The default rate – that nemesis of bond investors – crept slightly higher in October, to 2.13% from 1.94% in September, according to rating agency Standard & Poor’s. The gauge measures the percentage of speculative-grade corporate bond issuers that default on their bond payments through missed interest payments, bankruptcy filings or other, more creative default methods. From S&P:

        This is the first significant increase since the default rate started declining in December 2009. However, the default rate is a lagging indicator and an increasing trend usually results from sustained deterioration in both market fundamentals and economic growth.

        The default rate started rising from its trough of 1.0% at the end of 2007 and reached its peak of 11.5% in November 2009. The rate had been steadily declining until September. The increase in October is the first increase of more than 10 basis points since December 2009.

        S&P also noted that its distress ratio, which uses bond risk premiums as an indicator of potential future default risk, rose to 19.3 from 14.9 in September.<<<<<<<

      • Been doing it for the last 2 months,does accumulate shares quite fast, I have about 506 shares now. Good advice.TX.

 
JNK
36.76+0.10(+0.27%)11:20 AMEDT