FYI: A veteran of the bond-trading business with 35 years of experience once told me that junk bonds “read like a bond but trade like a stock.”
He was referring to the well-known correlation of junk bond prices to stock prices; a weak junk bond market means a weak stock market, and vice versa, although that correlation is far from perfect. After all, junk bonds are the riskiest bonds and stocks are even riskier due to the seniority of the claims on debt versus equity.
Regards,
Ted
https://www.marketwatch.com/story/the-junk-bond-bear-is-lurking-around-the-corner-2017-12-04/print
