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Bonds
Bonds:
A Guaranteed way to lose money?
Legislators and well-meaning regulators in
various countries push pension funds to increase their allocation to
fixed-interest securities. This is based on a narrow definition of
investment risk, but one that unfortunately seems to appeal to the lawyers,
accountants and actuaries that dominate the discussion.
It is correct to say that bonds are less risky if risk is defined as return
of principal, - in nominal terms. The experience of the past 100+ years,
however, has demonstrated that loss of purchasing power is a far greater
risk to the preservation of capital.
24-Oct-05
A Takeover
Panel for Bond Markets?
Shareholders - at least in the
United Kingdom - have for a long time benefited from a clear set of rules
enshrined in a Code of Practice.
The recent trend to Mega-Bids by large Buy-Out Funds that even start to
combine in consortia has created a situation where most sizeable companies
that have bond issues outstanding can become targets of bids.
As most Buyouts are also expected to use a substantial amount of debt
capital the outstanding bond issues can be subject to downgrading by the
markets and rating agencies.
The regulators and should without delay look into this problem. Including
the Holders of Debt in any Takeover Code would be a just solution and
support confident in the functioning of the Public Bond Markets
11-Aug-05
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