History of the Junk Bond Market (And Mike Milken)

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History of the Junk Bond Market (And Mike Milken)

History of the Junk Bond Market (And Mike Milken)

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Junk bonds are high yielding bonds whose maturity periods are usually short and are less affected by the changes in interest rates. As opposed to market bonds, junk bonds do not depend on economic and political factors; but have a propensity to act like stocks in their marketing behaviors. The development of junk bonds was facilitated by an American financier called Michael Milken who was born in the year 1946. In the mid 1980s, the US economy was at boom in which all the sectors were flourishing and performing excellently. As a result, Michael Milken saw it wise to introduce ‘high-yield bond buyers’ which enabled the raising of capital for various investments quickly (Trimbath, 2003).