Word: junks
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Dates: during 1980-1989
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...Milken who created and has dominated the market for junk bonds, the high-octane financial fuel that powers many of today's most daring Wall Street deals. The volume of these bonds has zoomed from less than $1 billion in 1981 to more than $175 billion today. In the process, Milken, 42, has amassed a fortune of at least $500 million and a reputation as the most influential financier since J.P. Morgan...
...role in 1980s finance. Is he a megalomaniac who has built a tottering tower of corporate debt? Or is he a financial genius whose funding of unsung, mid-size industries greatly overshadows his role as a takeover player? He has many defenders among buyers and users of his junk bonds. Says MCI chairman William McGowan, whom Drexel helped raise $2.4 billion for building long-distance telephone lines: "When we first went to Milken, we were not even qualified for junk bonds, but he was able to help us. People went to him because the rest of the financial establishment...
...always have the seed of great improvements." At Berkeley during the mid-'60s, Milken concentrated on math and business courses rather than on protest. It was there that he first considered the far-reaching idea upon which he built his empire. Milken came across a study showing that junk bonds, which at the time were often called fallen angels because they were the downgraded debt of ailing companies, actually represented a lucrative investment for those who bought them...
...graduate business student at Pennsylvania's Wharton School, Milken made junk bonds a focus of his scholarship. Despite their reputation for high risk, he found that the securities showed a history of few defaults. Milken believed the securities' relatively high yields, typically 3% to 5% more than an investment-grade corporate bond, were more than enough compensation for that slightly increased risk...
...idea or his ambition aside. As a trader for the old-line Philadelphia firm of Drexel Firestone in the mid-'70s, he scorned colleagues who hewed to tradition and "spent from 11 o'clock to 2 o'clock at the racquet club." The dogged Milken soon discovered that junk bonds could provide much needed capital for medium-size companies that were unable, because of their size, to issue investment-grade debt. Other firms, notably Lehman Bros., had already tried minting bonds that were high yield from the outset. But Milken was the first to build a market for the bonds...