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Expert says GM bankruptcy is the best option

Posted Feb 17th 2009 10:00AM by Zac Bissonnette (RSS feed)
Filed under: General Motors (GM)

The Wall Street Journal reports (subscription required) that bankruptcy "looms" for General Motors (NYSE: GM). The firm is supposed to present recovery plans to the government today. The Obama administration has reportedly asked GM and Chrysler to present information on possible scenarios involving a bankruptcy filing.

I recently wrote that bankruptcy is the best option for General Motors, and the sooner the better. Now, leading distressed debt expert Edward I. Altman, the Max L. Heine professor of finance at New York University's Stern School of Business. is joining the chorus of people who believe that bankruptcy is the best option.

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Junk bonds may really be junk - for investors

Posted Feb 6th 2008 11:16AM by Tom Taulli (RSS feed)
Filed under: Deals, Private Equity

It seems strange to invest in a security that is called "junk." But it's a huge business that can be quite lucrative. Hey, it made Mike Milken a billionaire. What's more, junk bonds have become a key financing mechanism for growth companies as well as leveraged buyouts.

The market for junk bonds has been particularly strong over the past few years, with a large spread between junk and high-quality securities was. That is, until the "credit crunch" hit Wall Street in August.

Now, Edward Altman – a professor and a finance guru – is predicting some grim news for junk bonds for this year. Basically, he thinks the default rate will spike to 4.64%, according to a piece in the Wall Street Journal [subscription required]. Keep in mind that the default rate was a paltry 0.51% in 2007.

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