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Interesting concept. I wonder if in the aftermarket these bonds will trade more like stocks due to the risk aspect changing over time (with the upper bound bein

• soVeryTired 8y ago
  Yep, they do. Unsecured corporate debt is colloquially referred to as Credit in finance. Equity and low-grade credit tend to correlate quite well. In fact, this is one way that companies die in a recession: credit spreads blow up (i.e. risky debt is much more expensive than good debt). That makes it difficult for struggling companies to refinance maturing debt, and they go under. There's even a class of debt called CoCo bonds (contingent convertibles) that turn into equity if the company is struggling. The idea is to avoid the maturing debt scenario I described above. In practice, they're a horrible product for investors. Equity-like risk with bond-like returns.