The Motley Fool Discussion Boards

Previous Page

Investing/Strategies / Bonds & Fixed Income Investments


Subject:  Re: What to do with My Savings... Date:  7/11/2010  5:14 PM
Author:  greenmartianV Number:  31072 of 35573

Lower rated bonds are considered junk bonds, and those below BB can be quite risky.

Minor comment, but you also have to look at the ratings with a jaded eyes as they seem to be assigned based on the total financial condition of a company rather than with regard for the specific maturity of a particular bond. To use a recent example I am familiar with, I looked at a recent retailer very short term bond (under a year) which was junk rated. However, this company's fiscal year balance sheet showed 800m in cash and 600m in total debt and the company generated plenty of free cash flow (enough so that this company was a rumored takeover target). Yet, when you looked at the maturity of