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The immediate trigger of the crash in the US occurred at the Federal Open Market Committee (FOMC) on February 3 and 4, 1994, although bond prices in Japan had started plummeting just a month earlier. [ 5 ] [ 8 ] Led by Chairman Alan Greenspan , the Committee reached a consensus to slightly raise its federal funds rate target from 3% to 3.25%.
The crash was apparently caused by a reaction to a news story of the breakdown of a $6.75 billion leveraged buyout deal for UAL Corporation, the parent company of United Airlines. When the UAL deal fell through, it helped trigger the collapse of the junk bond market.
The collapse of the high yield market in 1989 and 1990 would signal the end of the LBO boom. At that time, many market observers were pronouncing the junk bond market “finished.” This collapse would be due largely to three factors: The collapse of Drexel Burnham Lambert, the foremost underwriter of junk bonds (discussed above).
The stock market experienced a "mini-crash" in 1989. "Mini" is a relative term. ... 1989, the ripples were felt throughout the stock market, specifically the junk bond market.
For those who remember Mike Milken and the junk bond scandals of the 1980s, the mortgage crisis has a familiar ring. Although the general public thinks of Milken as an "insider trader," the bigger ...
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Due to several deals that did not work out, as well as an unexpected crash of the junk bond market, 1989 was a difficult year for Drexel even after it settled the criminal and SEC cases. Reports of an $86 million loss going into the fourth quarter resulted in the firm's commercial paper rating being cut in late November. This made it nearly ...
Michael Robert Milken (born July 4, 1946) is an American financier. He is known for his role in the development of the market for high-yield bonds ("junk bonds"), [2] and his conviction and sentence following a guilty plea on felony charges for violating U.S. securities laws. [3]