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Article: Bearing down on Milken. (Michael Milken and junk bond collapse)
- Article from:
- National Review
- Article date:
- March 19, 1990
- Author:
CopyrightCOPYRIGHT 1990 National Review, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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Wall Street--On February 13, Drexel Burnham filed for bankruptcy, dying shortly after the market for junk bonds went into decline. It was a case of "exit--pursued by bear market."
Michael Milken, the genius behind Drexel's rise, had built the firm by selling junk bonds to investors on a simple pair of facts: because the issuers of the bonds were not considered "investment grade" by Standard & Poor's or Moody's, they paid an extra-high rate of interest; yet, historically, companies that didn't get S&P's and Moody's little gold stars were no more likely to default than the companies that did. So the extra three or four percentage points of interest that junk paid ...