Since financial myths exploded in the 1980s, the perspective of time creates a unique opportunity to update and expand the analysis begun in Glenn Yago's 1991 book, Junk Bonds: How High Yield Securities Restructured Corporate America (OUP). When first published, Junk Bonds drew controversial responses, but some 12 years later, enough time has passed to allow this dispassionate empirical analysis to shear away the hype and hysteria that surrounded the Wall Street scandals, Washington controversies, and media frenzy of the time. In retrospect, the evidence clearly casts favorable light on the role of high‐yield securities (junk bonds), and the research presented in this book demonstrates how financial innovations enabled capital access for industrial restructuring, capital and labor productivity gains, and improved global competitiveness. The book provides a one‐stop data, reference, and case study presentation of firms and securities in the contemporary high‐yield market in the USA (and elsewhere), and of the financial innovations that spurred growth in the 1990s and will continue to finance the future. The high‐yield market incubated successive waves of financial technologies that now proliferate beyond junk bonds to all the dimensions and dynamics of global debt and equity capital markets. The book charts the recovery of the market in the 1990s, the wave of fallen angels, distressed credits and defaults in 2001–2002, and suggests how the high‐yield market will be recreated in the global market of the twenty‐first century. It also explicates the linkages between the high‐yield market and other credit and equity markets in managing a firm's capital structure to execute its business strategy. Anyone active in corporate finance, financial institutions, or capital markets will find this book useful for interpreting and understanding the recent history of both the high‐yield marketplace and its interaction with private equity, public equity, and fixed‐income markets. The material presented is arranged in 11 chapters and four appendices. The latter provide definitions of junk bonds, some technical material from Ch. 4, a “tools of the trade” glossary, and a literature review containing short summaries of seven topics (bond ratings, macroeconomic relationships, regulation, use of proceeds, Drexel Burnham Lambert – a bond underwriter, default rates, and risk) with associated references, a table of annotated references, and further references.
