Nextel Bond Information, Worth Article, from Yahoo board
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April Worth Mag., NXTL Bonds
by: dhhinc
17389 of 17390
ROBERT KAPITO
BLACKROCK HIGH YIELD BOND PORTFOLIO Invests in non-investment grade bonds with a minimum rating of C.
THE PICK: Nextel Comm. 2008, paying 9.95 percent
UP TO $69
The junk-bond market isn't what it used to be. That's a good thing. It's also why we like the 9.95 percent bonds, due in 2008, from Nextel
Communications (McLean, Virginia). Nextel is the only remaining independent wireless operator in the U.S. that can service the entire country. On
top of that, the company is generating tremendous momentum in operating cash flow. For bond investors, it's a good time to be buying Nextel's
high-yield paper. Lending standards are generally tighter today than they were before the credit crunch of 1990-91, and issuer credit quality is better,
too. In 1991, the average rate of default for non- investment-grade bonds was 10.6 percent, but in 1997 that rate plunged to just 1.8 percent. With the
market value of high-yield bonds having grown from just $24 billion in 1977 to around $600 billion today, many prominent corporations--usually in
high-risk, high-return industries--are using this market to raise capital. The high-yield market is returning 65 percent of the Standard & Poor's 500
Stock Index with only 39 percent of the volatility. The bond is now trading at around $65; our long-term price target for Nextel's 2008 issue is $78. |
