High-quality bonds, low expenses serve in stormy weather


Tim Buckley: John, to condition the noticeable, we’ve witnessed large declines in revenues for corporations and for municipalities. So, a whole lot of people are conversing about what is the fallout? Are people missing payments? Will we begin to see downgrades of bonds, defaults? What will the exercise sessions glance like? Can you give us some perspective about how your team’s thinking by this?

John Hollyer: Guaranteed, Tim. And you are right—this is a time when there will be downgrades and there will be defaults. But let us preserve it in perspective. If we glance at investment quality corporate bonds, for instance, even in the worst recessions, it is unusual to have defaults be more than 1% of the bonds. In municipal bonds, defaults are generally effectively underneath that, even in the worst recessions. In the substantial-yield world, it is not unusual to have probably as substantial as a

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