Junk Bond Billionaire Milken: If Companies Were Smart They'd Be Dumping More Stocks And Junk Bonds On Hungry Investors Right Now


Michael Milken is wondering why companies aren’t selling more stocks and junk bonds to investors right now.

After all, stocks and junk bonds have rallied hard since the financial crisis, and at these levels he sees them as a great deal… to sell:


Near-zero interest rates in the U.S. and Europe have fuelled demand for high-risk securities, providing companies with an opportunity to cut debt incurred during the excesses of the credit boom, Milken told an audience at the Milken Global Institute conference yesterday in Beverly Hills, California.

“It’s the individual’s fault, the individual leadership of that organisation, if they are not taking advantage of today’s markets to sell equity and debt, de-leverage and push out maturities,” he said during a panel moderated by Matt Winkler, editor-in-chief of Bloomberg News.

He continued:

“Defaults were exaggerated, the risks were exaggerated,” Milken said of the recovery in high-yield bonds. “Those risks existed in mortgage-backed securities, but they didn’t exist in industrial companies, and that’s what the market is saying.”

When a company sells stock or bonds at a certain price, it’s always going to be either a good deal for the investors buying or a good deal for the company selling.

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