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Basically everyone is desperate to invest money somewhere. Bonds are one of the safest instruments and often pension funds are legally obligated to invest at l
by xchaotic 8y ago
Basically everyone is desperate to invest money somewhere.
Bonds are one of the safest instruments and often pension funds are legally obligated to invest at least a proportion of funds in safe, not risky instruments.
This will not end well IMO.
- cmurf 8y agoTIPS bonds are one of the safest instruments. A regular bond can be as risky as stocks, whether traded short term or held to maturity. What people get with bonds, depending on the rating, is something short of a guarantee they'll get principle back with the agreed upon interest - but can you really accurately assess risk over 10 years? 30 years? There's widespread agreement that corporate bonds aren't paying enough compared to the risk, and yet people continue to invest in it.
- ng12 8y agoI would argue that a "regular" bond refers to government-backed securities, basically AA at a minimum. When people want to talk about corporate bonds they're careful to refer to them as junk bonds.
- kgwgk 8y agoJunk bonds (high yield) are a small subset of corporate bonds. But it’s true that even investment grade debt is not as good as it used to be. https://www.bloomberg.com/opinion/articles/2018-07-10/corporate-bonds-are-getting-junkier https://www.bloomberg.com/opinion/articles/2018-07-10/corpor...
- cmurf 8y agoLiterally none of this is correct. Bonds do not inherently or even typically refer to government securities. And not all government issued debt is AA, for example Mexico bonds are currently rated BBB+. Junk bonds are speculative rather than investment grade, quite a lot of corporate bonds are investment grade.