FYI: Worrying about bond-market liquidity has gone out of vogue. But some real risks linger.
A good example can be found in Community Health System’s $14.5 billion of bonds, which are facing some serious challenges. The most obvious one is that the for-profit hospital operator has some fundamental credit-related problems, which the price of its bonds isn't reflecting yet. Gadfly outlined some of those issues last week.
But Community Health and its investors have another more technical issue to worry about. Franklin Income Fund owns more than $2 billion of Community Health’s bonds, or more than 16 percent of the debt outstanding, according to data compiled by Bloomberg. This one fund owns more than $900 million of the hospital operator's bonds maturing in 2019, or about 47 percent of those outstanding.
Regards,
Ted
https://www.bloomberg.com/gadfly/articles/2017-10-31/franklin-income-fund-s-big-bond-bets-raise-liquidity-concernM*: FKINX Holdings: (CHS 9th Largest Holding)
http://portfolios.morningstar.com/fund/holdings?t=FKINX®ion=usa&culture=en-US
