HIGH YIELD BONDS: Market Structure, Portfolio Management, and Credit Risk Modeling

Mark Shenkman · Theodore M. Barnhill · William Maxwell

Jan 1999 · McGraw Hill Professional

About this ebook

HIGH-YIELD BONDS provides state-of-the-art research, strategies, and toolsÑalongside the expert analysis of respected authorities including Edward Altman of New York UniversityÕs Salomon Center, Lea Carty of MoodyÕs Investor Service, Sam DeRosa-Farag of Donaldson, Lufkin & Jenrette, Martin Fridson of Merrill Lynch & Company, Stuart Gilson of Harvard University, Robert Kricheff of CS First Boston, and Frank Reilly of the University of Notre DameÑto help you truly understand todayÕs high-yield market. For added value and ease of reference, this high-level one-volume encyclopedia is divided into seven sections detailing virtually every aspect of high-yield bond investment. They include: Market structureÑThe role of investment banks in security innovation and market development, evolution of analytical methodologies, and recent leveraged loan market developments; Security risk analysisÑHistorical bond default rates, real interest rate and default rate relationships, and new simulation methodologies for modeling credit quality; Security valuationÑImpact of seniority and security on bond pricing and return, important trading factors, and a Monte Carlo simulation methodology for valuing bonds and options in the context of correlated interest rate and credit risk; Market valuation modelsÑEconometric studies which detail the importance of monetary influences, risk-free interest rates, default rates, mutual fund flows, and seasonal fluctuations; Portfolio managementÑHistorical perspective and comparison to alternative investments, analysis of indices available to investors, and specific portfolio selection and risk management strategies of professional fund managers; Distressed security investingÑHistorical risk and return information, plus an academic overview of the market and decision criteria for uncovering and investing in securities with higher-than-average risk-adjusted returns; Corporate finance considerationsÑEmerging firmsÕ strategic choice between external debt and equity financing, as well as the choice of issuing public versus private (Rule-144a) securities. HIGH-YIELD BONDS provides extensive coverage of bond valuation and the construction and management of high-yield portfolios. Advanced Monte Carlo simulation models for the valuation of bonds and options on bonds as well as risk assessments on portfolios of bonds under conditions of correlated interest rate and credit risk are demonstrated. In todayÕs explosive environment of multiple new issues and high risk versus return relationships, it is paramount that you get advice from analysts and experts who have been influential in shaping and defining the market. HIGH-YIELD BONDS will provide you with a valuable reference to this fascinating and constantly changing class of securities, helping you assemble a stable, diversified portfolio of fixed income investments that provides the greatest returns and the lowest risks.

About the author

Born in Lincoln, Illinois in 1908, William Maxwell is one of America's more prominent writers. He is the recipient of numerous awards including the National Book Critics Circle Award (1994), and the American Book Award (1982) for his novel "So Long, See You Tomorrow." Maxwell's fiction has been described as nostalgic. Most of his work takes place in simpler, gentler times in the small towns of the American Midwest. Two of Maxwell's novels, "They Came Like Swallows" (1937) and "So Long, See You Tomorrow" (1980), deal with characters who lose relatives in the influenza epidemic of 1918. Maxwell's own mother died in the epidemic when he was ten years old. Maxwell published his first novel, "Bright Center of Heaven," in 1934. He moved to New York City in 1936 and was hired by the New Yorker. His years as an editor there, 1936 to 1976, coincided with what many believe are the magazine's finest. This was the era that saw the publication of the works of many accomplished writers, such as J. D. Salinger, Eudora Welty, John Updike, and Mary McCarthy in the New Yorker's pages. Maxwell has published six novels, several collections of short stories, a family history, and numerous book reviews. He served as president of the National Institute of Arts and letters from 1969 to 1972. William Maxwell has been married for over 50 years to the former Emily Noyes. They met at the New Yorker when she applied for a job. The couple has two daughters.