Defaults by stealth are rare: Marty Fridson column

Defaults by stealth are rare

Martin Fridson

On September 30, 2009, the Merrill Lynch High Yield Master II Index contained bonds of 854 different companies. Over the next 12 months, 25 of those companies defaulted, equivalent to a default rate of 2.93%, considerably below the 4.8% average rate reported by Moody’s since 1983.

Given the US economy’s continuing difficulties, the below-average default rate has surprised many investors. They might have found the answer to another question even more surprising: how many of the 25 defaulting

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