High Yield Bonds: Market Structure, Valuation, and Portfolio Strategies [Hardcover]

Theodore Barnhill (Author), Mark Shenkman (Author), William Maxwell (Author)

Book Description

Series: McGraw-Hill Library of Investment and Finance | Publication Date: March 31, 1999

HIGH-YIELD BONDS provides state-of-the-art research, strategies, and toolsÑalongside the expert analysis of respected authorities including Edward Altman of New York UniversityÕs Salomon Center, Lea Carty of MoodyÕs Investor Service, Sam DeRosa-Farag of Donaldson, Lufkin & Jenrette, Martin Fridson of Merrill Lynch & Company, Stuart Gilson of Harvard University, Robert Kricheff of CS First Boston, and Frank Reilly of the University of Notre DameÑto help you truly understand todayÕs high-yield market. For added value and ease of reference, this high-level one-volume encyclopedia is divided into seven sections detailing virtually every aspect of high-yield bond investment. They include: Market structureÑThe role of investment banks in security innovation and market development, evolution of analytical methodologies, and recent leveraged loan market developments; Security risk analysisÑHistorical bond default rates, real interest rate and default rate relationships, and new simulation methodologies for modeling credit quality; Security valuationÑImpact of seniority and security on bond pricing and return, important trading factors, and a Monte Carlo simulation methodology for valuing bonds and options in the context of correlated interest rate and credit risk; Market valuation modelsÑEconometric studies which detail the importance of monetary influences, risk-free interest rates, default rates, mutual fund flows, and seasonal fluctuations; Portfolio managementÑHistorical perspective and comparison to alternative investments, analysis of indices available to investors, and specific portfolio selection and risk management strategies of professional fund managers; Distressed security investingÑHistorical risk and return information, plus an academic overview of the market and decision criteria for uncovering and investing in securities with higher-than-average risk-adjusted returns; Corporate finance considerationsÑEmerging firmsÕ strategic choice between external debt and equity financing, as well as the choice of issuing public versus private (Rule-144a) securities. HIGH-YIELD BONDS provides extensive coverage of bond valuation and the construction and management of high-yield portfolios. Advanced Monte Carlo simulation models for the valuation of bonds and options on bonds as well as risk assessments on portfolios of bonds under conditions of correlated interest rate and credit risk are demonstrated. In todayÕs explosive environment of multiple new issues and high risk versus return relationships, it is paramount that you get advice from analysts and experts who have been influential in shaping and defining the market. HIGH-YIELD BONDS will provide you with a valuable reference to this fascinating and constantly changing class of securities, helping you assemble a stable, diversified portfolio of fixed income investments that provides the greatest returns and the lowest risks.

Editorial Reviews

From the Back Cover

The availability of newer forms of high-yield bonds, along with dramatic growth in international issues and leveraged loans, marks a growing maturity in the high-yield bond market. But mistakes can be costly, and busy institutional investers and corporate finance officers can still find it challenging to locate the most favorable investment opportunities. High-Yield Bonds thoroughly explores every angle of this complex market, delivering statistics, research findings, and empirical facts guaranteed to help you understand the risks and rewards of high-yield investing. More than just a theoretical treatise on lower-grade bonds, this hands-on reference shows you how to uncover issues that provide exceptional returns for acceptable risk. Examples of the discussions include: a 77-year study of corporate bond defaults that reveals patterns and correlations--helping you intuitively judge a bond's risks; credit analylsis methodologies to help you determine an issuer's weaknesses and better evaluate the 12- to 24-month prospects; simulation methodologies to identify optimally diversified portfolios. As U.S. and international institutional investors seek higher yields, and emerging companies seek new sources of capital to finance growth, the high-yield bond market will continue to grow in strength and importance. Let High-Yield Bonds act as your on-call investment advisor in navigating this risky-yet profitable-market.

About the Author

Theodore M. Barnhill, Jr., Ph.D., is professor of finance and director of the Financial Markets Research Institute at George Washington University in Washington, D.C. Dr. Barnhill is a widely published financial researcher and author and the developer of the ValueCalc financial software (www.valuecalc.com). William F. Maxwell, Ph.D., is a visiting assistant professor of finance at Georgetown University, specializing in the areas of fixed income valuation and risk management. Dr. MaxwellÕs work has been published in academic and professional journals. His professional experience includes security valuation and mergers and acquisitions. Mark R. Shenkman, MBA, is a pioneer in the field of high-yield bonds. Actively involved in the high-yield market for over two decades, Mr. Shenkman is the founder and chief investment officer of Shenkman Capital Management, a New York investment management firm that focuses exclusively on the high-yield market.

Product Details

• Hardcover: 574 pages
• Publisher: McGraw-Hill; 1 edition (March 31, 1999)
• Language: English
• ISBN-10: 0070067864
• ISBN-13: 978-0070067868
• Product Dimensions: 9.1 x 6.4 x 1.5 inches
• Shipping Weight: 2.2 pounds
• Average Customer Review: 4.0 out of 5 stars  See all reviews (5 customer reviews)
• Amazon Best Sellers Rank: #1,230,829 in Books (See Top 100 in Books)

Customer Reviews

Most Helpful Customer Reviews

31 of 37 people found the following review helpful:

5.0 out of 5 stars The Best Guide Book to High Yield Bonds Ever, January 6, 1999

By A Customer

This review is from: High Yield Bonds: Market Structure, Valuation, and Portfolio Strategies (Hardcover)

I have had the privilege of reading the galley proofs of this book and find it to be THE definitive word on High Yield Investing. This book develops the blueprint for how to navigate, understand, and analyze High Yield Bonds. A must for MBA students, a requirement for anyone in the field already, and a vital tool for investors.

The book's three authors (The George Washington University Business School, Georgetown Business School, and 20+ years High Yield Experience) have used their knowledge and connections to get the best information available

2 of 2 people found the following review helpful:

4.0 out of 5 stars The best HY Omnibus book so far., January 11, 2007

By 

Bachelier ""1004"" (Ile de France) - See all my reviews

Amazon Verified Purchase

This review is from: High Yield Bonds: Market Structure, Valuation, and Portfolio Strategies (Hardcover)

This is an excellent book that is now showing its age and needs an update. It also lacks a CDROM with data sets which would make more explicit many of the points authors make. In addition, Drexel Burnham Lambert, like Banquo's ghost, is alluded to on nearly every other page, yet the authors here are hesitant to differentiating between high yield bonds (non-investment grade debt) and junk (anything issued by Michael Milken).

This work also glaringly lacks some crucial work by Paul Asquith on seasoned high yield bond defaults. Don't stop here.

4.0 out of 5 stars High Yield Bonds - High Quality Book from 1998, April 24, 2009

By 

Bernardo "Bernard E. Scoville" (Sacramento, California) - See all my reviews

Amazon Verified Purchase

This review is from: High Yield Bonds: Market Structure, Valuation, and Portfolio Strategies (Hardcover)

High Yield Bonds - High Quality Book from 1998. This great book gives empirical evidence to answer many questions. Quite thoroughly. Subjects covered include:
Who buys high yield bonds? Insurance companies and mutual funds are the biggest buyers....
How big are default rates? Average about 3.5% a year....
How stable are bond ratings? About 5% go up or down in ratings every year. Most stay the same....
Many more subjects covered well....
The main problem that I had with the book is that it is not up to date; it was written in 1998.
Bernard E. Scoville