Thursday, May 05, 2005

Random Roger's Big Picture: GM Debt=Junk

I am not interested in owning bonds right now but Roger makes a great point. There are many holders of GM bonds who have rules that require them to sell; they cannot hold junk rated bonds.

If I were a buyer, I would wait a few days to see where the bonds settle. One of my biggest and best trades ever was to buy municipal bonds in late 1986 when the banks were being forced to sell. The yields on AAA tax free bonds yielded more than taxable treasuries.