GM will pay higher interest on new bonds

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GM will pay higher interest on new bonds
Guest 6 May 2005 18:32:08
	You are confused, what do bonds have to do with stocks? For another, the Bond market went up not down. Bond ratings determine the interest rate the bonds earn at issue. Which means GM will have to offer higher interest if they decide to issue any new bonds. There are herds of people that made hugh amounts of money from junk bonds over the years, issued by strong corporations, including myself Junk bonds pay a higher interest rate than AAA bonds. Bond fund managers will not bump current bonds that have not matured but rather will gladly buy more bonds that pay higher interest bonds from any substantial company like GM if they issue new bonds. mike hunt "Dan J.S." wrote:> This may be a good time to short Ford and GM, since portfolio managers will> have to dump the junk bonds out of their portfolios, as most charters do not> allow junk bonds in there. There will be a sell off, and a quick way to make> money on shorting the stock.
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Dan J.S. 6 May 2005 20:58:25 [ permanent link ]
	<MikeHunt@lycos.com> wrote in message news:427B7FE8.796CA26E@lycos.com...> You are confused, what do bonds have to do with stocks? For> another, the Bond market went up not down. Bond ratings> determine the interest rate the bonds earn at issue. Which means> GM will have to offer higher interest if they decide to issue any> new bonds. There are herds of people that made hugh amounts of> money from junk bonds over the years, issued by strong> corporations, including myself Junk bonds pay a higher interest> rate than AAA bonds. Bond fund managers will not bump current> bonds that have not matured but rather will gladly buy more bonds> that pay higher interest bonds from any substantial company like> GM if they issue new bonds.> mike hunt about 75% of the 269 billion dollars of junk bonds will have to be put back on the street. What will that do to their price? If you believe that GM will be around 10 years from now, it could be the best investment ever.
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Guest 6 May 2005 23:18:38 [ permanent link ]
	New bond ratings only effect new bond issues, get real. You bring to mind the 5000 shares of Chrysler I bought many years ago, when all the soothsayers were saying sell. ;) No sense in me continuing to try to enlighten one who does not wish to be enlightened it seems, bye mike hunt "Dan J.S." wrote:> <MikeHunt@lycos.com> wrote in message news:427B7FE8.796CA26E@lycos.com...> > You are confused, what do bonds have to do with stocks? For> > another, the Bond market went up not down. Bond ratings> > determine the interest rate the bonds earn at issue. Which means> > GM will have to offer higher interest if they decide to issue any> > new bonds. There are herds of people that made hugh amounts of> > money from junk bonds over the years, issued by strong> > corporations, including myself Junk bonds pay a higher interest> > rate than AAA bonds. Bond fund managers will not bump current> > bonds that have not matured but rather will gladly buy more bonds> > that pay higher interest bonds from any substantial company like> > GM if they issue new bonds.> > mike hunt> about 75% of the 269 billion dollars of junk bonds will have to be put back> on the street. What will that do to their price? If you believe that GM will> be around 10 years from now, it could be the best investment ever.
		Add comment


Dan J.S. 6 May 2005 23:58:55 [ permanent link ]
	<BigJohnson@mailcity.com> wrote in message news:427BC30E.C6D0DE0A@mailcity.com...> New bond ratings only effect new bond issues, get real.> You bring to mind the 5000 shares of Chrysler I bought many years> ago, when all the soothsayers were saying sell. ;)> No sense in me continuing to try to enlighten one who does not> wish to be enlightened it seems, bye> mike hunt HUH?? are you serious? I do this for a living. This rating applies to ALL outstanding non-preferred bonds. About $270 billion dollars worth. Not only new issues, but all of them. Read a book once in a while.
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Scott in Florida 7 May 2005 00:16:21 [ permanent link ]
	On Fri, 6 May 2005 14:58:55 -0500, "Dan J.S." <me@hyperx.com> wrote: <BigJohnson@mailcity.com> wrote in message >news:427BC30E.C6D0DE0A@mailcity.com...>> New bond ratings only effect new bond issues, get real.>> You bring to mind the 5000 shares of Chrysler I bought many years>> ago, when all the soothsayers were saying sell. ;)>> No sense in me continuing to try to enlighten one who does not>> wish to be enlightened it seems, bye>> mike hunt> HUH?? are you serious? I do this for a living. This rating applies to ALL >outstanding non-preferred bonds. About $270 billion dollars worth. Not only >new issues, but all of them.> Read a book once in a while. > Like it won't affect the price of bonds out there now...LOL -- Scott in Florida
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Dan J.S. 7 May 2005 00:22:45 [ permanent link ]
	"Dan J.S." <me@hyperx.com> wrote in message news:117nj3vhvnk6ac9@news.supernews.com...> <BigJohnson@mailcity.com> wrote in message > news:427BC30E.C6D0DE0A@mailcity.com...>> New bond ratings only effect new bond issues, get real.>> You bring to mind the 5000 shares of Chrysler I bought many years>> ago, when all the soothsayers were saying sell. ;)>> No sense in me continuing to try to enlighten one who does not>> wish to be enlightened it seems, bye>> mike hunt> HUH?? are you serious? I do this for a living. This rating applies to ALL > outstanding non-preferred bonds. About $270 billion dollars worth. Not > only new issues, but all of them.> Read a book once in a while.> To clarify, GM will pay more on future debts because of this rating, but currently, anyone selling this bond, as its rated junk, will have to sell it at a discount because of the risk that GM will never repay the bond with its current face value. So this rating change will screw GM in the future if they try to issue more bonds, and it screws the current portfolio managers who can't hold junk bonds in their portfolios.
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Jeff Strickland 7 May 2005 00:52:50 [ permanent link ]
	"Dan J.S." <me@hyperx.com> wrote in message news:117nkgm21h4b0e@news.supernews.com...> "Dan J.S." <me@hyperx.com> wrote in message> news:117nj3vhvnk6ac9@news.supernews.com...> > <BigJohnson@mailcity.com> wrote in message> > news:427BC30E.C6D0DE0A@mailcity.com...> >> New bond ratings only effect new bond issues, get real.> >> You bring to mind the 5000 shares of Chrysler I bought many years> >> ago, when all the soothsayers were saying sell. ;)> >> No sense in me continuing to try to enlighten one who does not> >> wish to be enlightened it seems, bye> >> mike hunt> > HUH?? are you serious? I do this for a living. This rating applies to outstanding non-preferred bonds. About $270 billion dollars worth. Not> > only new issues, but all of them.> > Read a book once in a while.> > To clarify, GM will pay more on future debts because of this rating, but> currently, anyone selling this bond, as its rated junk, will have to sell at a discount because of the risk that GM will never repay the bond with current face value. So this rating change will screw GM in the future if> they try to issue more bonds, and it screws the current portfolio managers> who can't hold junk bonds in their portfolios.> Which means that you and I are screwed if we have a portfolio with these junk bonds already in it. Our portfolio - presumably a 401(k) or similar - that has GM or Ford bonds in it will have to liquidate those bonds at a loss if the portfolio is not allowed to carry those bonds. (I assume a 401(k) or equivelent, because you and I as private investors could conceivably hold the junk bonds to maturity and reap a windfall on the new junk status, and the higher rates that the bonds might command. We are able to guage the extent of our exposure, but a portfolio manager will not have the latitude that we have to guage the risk, he will be bound by the prospectus to keep the risk at a certain level, and junk bond is not that level so he'll be required to dump the newly designated junk that he might be holding. If our portfolio has these bonds, and the manager is forced to sell them off at a loss, then we take a hit on the growth of the portfolio for this particular period. Presumably, the manager can find another bond to put in to replace these junk bonds, but shouldn't we have wanted this to happen long before junk status is declared? Bonds do not go to junk status overnight or in a vacuum, if the manager is worth a crap, he should have jetisoned these flakey bonds several weeks ago.
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Guest 7 May 2005 01:37:01 [ permanent link ]
	I'm glad I didn't buy any of my bonds from you. Dan "Dan J.S." wrote:> <BigJohnson@mailcity.com> wrote in message> news:427BC30E.C6D0DE0A@mailcity.com...> > New bond ratings only effect new bond issues, get real.> > You bring to mind the 5000 shares of Chrysler I bought many years> > ago, when all the soothsayers were saying sell. ;)> > No sense in me continuing to try to enlighten one who does not> > wish to be enlightened it seems, bye> > mike hunt> HUH?? are you serious? I do this for a living. This rating applies to ALL> outstanding non-preferred bonds. About $270 billion dollars worth. Not only> new issues, but all of them.> Read a book once in a while.
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Guest 7 May 2005 01:37:58 [ permanent link ]
	Bingo! Dan "Dan J.S." wrote:> "Dan J.S." <me@hyperx.com> wrote in message> news:117nj3vhvnk6ac9@news.supernews.com...> > <BigJohnson@mailcity.com> wrote in message> > news:427BC30E.C6D0DE0A@mailcity.com...> >> New bond ratings only effect new bond issues, get real.> >> You bring to mind the 5000 shares of Chrysler I bought many years> >> ago, when all the soothsayers were saying sell. ;)> >> No sense in me continuing to try to enlighten one who does not> >> wish to be enlightened it seems, bye> >> mike hunt> > HUH?? are you serious? I do this for a living. This rating applies to ALL> > outstanding non-preferred bonds. About $270 billion dollars worth. Not> > only new issues, but all of them.> > Read a book once in a while.> > To clarify, GM will pay more on future debts because of this rating, but> currently, anyone selling this bond, as its rated junk, will have to sell it> at a discount because of the risk that GM will never repay the bond with its> current face value. So this rating change will screw GM in the future if> they try to issue more bonds, and it screws the current portfolio managers> who can't hold junk bonds in their portfolios.
		Add comment


Art 8 May 2005 07:51:43 [ permanent link ]
	THere are multiple ratings and only one has labeled them junk. "Jeff Strickland" <spamcatcher@yahoo.net> wrote in message news:GIydnXZhzO9ZRObfRVn-uQ@ez2.net...> "Dan J.S." <me@hyperx.com> wrote in message> news:117nkgm21h4b0e@news.supernews.com...>> "Dan J.S." <me@hyperx.com> wrote in message>> news:117nj3vhvnk6ac9@news.supernews.com...>> > <BigJohnson@mailcity.com> wrote in message>> > news:427BC30E.C6D0DE0A@mailcity.com...>> >> New bond ratings only effect new bond issues, get real.>> >> You bring to mind the 5000 shares of Chrysler I bought many years>> >> ago, when all the soothsayers were saying sell. ;)>> >> No sense in me continuing to try to enlighten one who does not>> >> wish to be enlightened it seems, bye>> >> mike hunt>> > HUH?? are you serious? I do this for a living. This rating applies to> ALL>> > outstanding non-preferred bonds. About $270 billion dollars worth. Not>> > only new issues, but all of them.>> > Read a book once in a while.>> > To clarify, GM will pay more on future debts because of this rating, but>> currently, anyone selling this bond, as its rated junk, will have to sell> it>> at a discount because of the risk that GM will never repay the bond with> its>> current face value. So this rating change will screw GM in the future if>> they try to issue more bonds, and it screws the current portfolio >> managers>> who can't hold junk bonds in their portfolios.>> Which means that you and I are screwed if we have a portfolio with these> junk bonds already in it. Our portfolio - presumably a 401(k) or similar -> that has GM or Ford bonds in it will have to liquidate those bonds at a > loss> if the portfolio is not allowed to carry those bonds. (I assume a 401(k) > or> equivelent, because you and I as private investors could conceivably hold> the junk bonds to maturity and reap a windfall on the new junk status, and> the higher rates that the bonds might command. We are able to guage the> extent of our exposure, but a portfolio manager will not have the latitude> that we have to guage the risk, he will be bound by the prospectus to keep> the risk at a certain level, and junk bond is not that level so he'll be> required to dump the newly designated junk that he might be holding.> If our portfolio has these bonds, and the manager is forced to sell them > off> at a loss, then we take a hit on the growth of the portfolio for this> particular period. Presumably, the manager can find another bond to put in> to replace these junk bonds, but shouldn't we have wanted this to happen> long before junk status is declared? Bonds do not go to junk status> overnight or in a vacuum, if the manager is worth a crap, he should have> jetisoned these flakey bonds several weeks ago.>
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GM will pay higher interest on new bonds

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