Lethal cocktails rarely end well

‘BB-

‘Companies with these ratings are widely considered to be "speculative grade"and are even more vulnerable to changing economic conditions than the prior [A rated] group.

‘Nevertheless, these companies largely demonstrate the ability to meet their debt payment obligations.’

Bottom tier. Speculative grade. And, that’s just the B’s.

What about the ‘Below B’ and ‘Not Rated’ bonds?

That stuff is junk and it’s being stuffed into portfolios.

The chase for return is reducing credit quality AND increasing exposure to illiquid investments…in the form of ‘Highly leveraged Alternative Investments’.

Any asset with that label should be ringing bells loud enough to be heard across the Pacific.

But, in the search for return, the funds are loading up on this toxic stuff.

While the money-go-round continues, then all is well.

Investors (lenders) receive their promised returns and those looking to withdraw in an orderly fashion are paid out.