Financial Times/Joe Rennison, Andrew Edgecliffe-Johnson, Peter Wells and Nicholas Megaw/5-12-2022
“Diebold Nixdorf’s $400mn bond maturing in 2024, which carries a low rating of triple C, cratered after the company reported weak earnings, slumping to just above 40 cents on the dollar — territory investors consider to be distressed. It had traded above 90 cents on the dollar as recently as two weeks ago.”
USAGOLD note: it is disconcerting how quickly we have gone from stability to inflation and inflation to general systemic risks – the corporate bond market being one of the latter. Even more disconcerting when one takes into account that we aren’t even to first base on the Fed’s monetary tightening program. A bond dropping 65% in value over a two-week period is a sure sign of general market stress. There’s is always the fallback position of holding it to maturity which works until the issuer finds itself unable to meet its obligations, or worse, ends up in bankruptcy proceedings. Most investors are acutely aware of the impact a weakening economy has on stocks, but few take into account the effect it has on the corporate bond market. This article connects the dots.
