Date updated:08-04-2007
From Barron's 8-6-07:
"Yes, junk bonds can be volatile. Yield margins in general narrowed by about 0.30 of a percentage point last week after getting as wide as 4.60 percentage points the week before. And the contagion produced by the housing slump likely will continue to spread and produce more damage.
Still, credit-quality has some strong support right now. Growth in gross domestic product in the second quarter was a healthy 3.4%, corporate earnings growth was OK, and default rates -- the bane of the junk-bond market -- are expected to inch up to just 3.5% a year from their near-historic lows.
Individual investors may face somewhat less competition than usual from the big players. Typically, Wall Street and hedge funds would be the first to jump in to snap up junk bonds if they spotted a screaming buy. But the Street is on the hook for big bridge loans to LBO sponsors, now that high-yield investors have balked at buying bonds from debt-laden companies."
So here are some bond plays for the individual investor.

-
HIO
Western Asset Hig - $5.60
- +0.36%
- $5.67
From Barron's 8-6-07: "One closed-end fund worth a look is Western Asset High Income Opportunity Fund (HIO), which doesn't have the extra leverage of many other closed-ends. The leveraged ones have more volatility during big moves up or down, says Mariana Bush, analyst at Wachovia Securities. The fund trades at a 12% discount to net asset value, compared with a 6% discount at the end of May."

-
HYG
Ishares Iboxx Hy - $85.90
- -0.20%
- $85.89
From Barron's 8-6-07: "There's even an exchange-traded fund for junk, the iShares iBoxx $ High Yield Corporate Bond Fund (HYG), which closely mirrors average prices in the $1 trillion high-yield universe and carries lower fees than mutual funds. Launched in April, its shares have returned a total of negative 6.10% in the past three months."

-
MGM
M G M Mirage - $10.75
- +1.90%
- $10.65
From Barron's 8-6-07: "Some of the safer and most intriguing bonds are in the casino sector, including MGM Mirage (MGM), which reported boffo earnings this week. "When the market recovers, it will be a blue chip that investors will flock to," says Barbara Cappaert, analyst at Montpelier, Vt.-based high-yield research firm KDP Investment Advisors."

-
GM
Gm - $0.00
- N/A
- $N/A
From Barron's 8-6-07: "General Motors Acceptance Corp.'s 6[frac78]% bonds due 2012, in part because it's a big issue that's easily traded. The bonds have a dollar price in the low-90s, yielding nearly 9%, a spread of 4.4 percentage points over comparable Treasuries. And this is for a bond at the cusp of investment grade."

-
DISH
Dish Network Corp - $21.01
- +1.20%
- $20.74
From Barron's 8-6-07: Bonds due 2016 trading at 95.5 and yileding 7.86%. Satellite company has high and rising margins.
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A. i was just wondering why all of our
favorite (now)investment firms are in on
the DG deal and not the one who had
purchased a fund of hedge funds last
year.
A. The only one I own : SLX,
too hard pick a winner out all of them
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