In what sense did the rating agencies do a terrible job here? First B is a junk rating, not investment grade. Secondly if you get paid 7.9% for six years plus a

In what sense did the rating agencies do a terrible job here? First B is a junk rating, not investment grade. Secondly if you get paid 7.9% for six years plus a market price of 30 cents on the dollar you get back more than 75 cents on the dollar, which would have been comparable to the performance of US 30 year Treasury issued around the same time. People do realize that if the principal is not paid back then whether there is one year or 90 years left on the bond term is irrelevant, right? In other words if you suspect the default risk is high you might as well buy the 100 year instead of the 10 year to get compensated by the higher premium.