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Jan 12, 2016

The Wall Street Journal says: "The debt world is haunted by a specter—that of a destabilizing run on markets. But not just stock markets, high yield bond markets.
Goldman Sachs, for one, put out a warning that Franklin Resources “is most at risk” given the large high-yield holdings of its funds, poor performance, and accelerated outflows.

Now, the high yield bonds of Sprint, one of the most popular junk bonds on the Street, have lost over 25% of principal.
The Journal points out that two years ago, the wireless carrier’s executives were celebrating the sale of $6.5 billion dolalrs in junk-rated bonds—a record offering that underscored investors’ demand for riskier debt as the Federal Reserve kept interest rates low. Brokers and many advisors were pushing junk bonds—mostly referring to them as high yield—to try to offset poor yields from quality bonds.

Those original Sprint bonds sold at par—100 cents on the dollar—but are now trading near 75. Steve and Sinclair review what's happening and why in the bond market, and why so many big name mutual funds are at risk, including Double Line and some Vanguard funds.

In the Q & A segment, real estate attorney Stephanie Wilson, partner in the law firm of Stoops, Denious, Wilson, and Murray, joins the A-Team to dig into leasing clauses that can blow up for both tenants and investor/landlords.