HEHY: High Equity High Yield

In finance, a high yield bond (non-investment grade bond, speculative grade bond or junk bond) is a bond that is rated below investment grade at the time of purchase. These bonds have a higher risk of default or other adverse credit events, but typically pay higher yields than better quality bonds in order to make them attractive to investors.

Flows and levels
Global issuance of high yield bonds more than doubled in 2003 to nearly $146 billion in securities issued from less than $63 billion in 2002, although this is still less than the record of $150 billion in 1998. Issuance is disproportionately centered in the U.S.A., although issuers in Europe, Asia and South Africa have recently turned to high yield debt in connection with refinancings and acquisitions. In 2006, European companies issued over €31 billion of high yield bonds.[1]

Risk
The holder of any debt is subject to interest rate risk and credit risk. Interest rate risk refers to the risk of the market value of a bond changing in value due to changes in the structure or level of interest rates or credit spreads. The credit risk of a high yield bond refers to the probability and probable loss upon a credit event (i.e., the obligor defaults on scheduled payments, files for bankruptcy, or the bond is restructured.)

A credit rating agency attempts to describe the risk with a credit rating such as AAA. In the North America, the five major agencies are Standard and Poor's, Moody's, Fitch Ratings, Dominion Bond Rating Service and A.M Best. Bonds in other countries may be rated by US rating agencies or by local credit rating agencies. Rating scales vary; the most popular scale uses (in order of increasing risk) ratings of AAA, AA, A, BBB, BB, B, CCC, CC, C, with the additional rating D for debt already in arrears. Government bonds and bonds issued by government sponsored enterprises (GSE's) are often considered to be in a zero-risk category above AAA; and categories like AA and A may sometimes be split into finer subdivisions like "AA-" or "AA+".

Bonds rated BBB- and higher are called investment grade bonds. Bonds rated lower than investment grade on their date of issue are called speculative grade bonds, derisively referred to as "junk" bonds.

The lower-rated debt typically offers a higher yield, making speculative bonds attractive investment vehicles for certain types of financial portfolios and strategies. Many pension funds and other investors (banks, insurance companies), however, are prohibited in their by-laws from investing in bonds which have ratings below a particular level. As a result, the lower-rated securities have a different investor base/clientele than investment grade bonds.

The value of speculative bonds is affected to a higher degree than investment grade bonds by the possibility of default. For example, in a recession interest rates may drop, and the drop in interest rates tends to increase the value of investment grade bonds; however, a recession tends to increase the possibility of default in speculative grade bonds.

Usage
The original speculative grade bonds were bonds that once had been investment grade at time of issue, but where the credit rating of the issuer had slipped and the possibility of default increased significantly. These bonds are called "Fallen Angels".

The investment banker, Michael Milken, realised that fallen angels had regularly been valued less than what they were worth. His time with speculative grade bonds started with his investment in these. Only later did he and other investment bankers at Drexel Burnham Lambert, followed by those of competing firms, begin organising the issue of bonds that were speculative grade from the start. Speculative grade bonds thus became ubiquitous in the 1980s as a financing mechanism in mergers and acquisitions. In a leveraged buyout (LBO) an acquirer would issue speculative grade bonds to help pay for an acquisition and then use the target's cash flow to help pay the debt over time.

In 2005, over 80% of the principal amount of high yield debt issued by U.S. companies went toward corporate purposes rather than acquisitions or buyouts.

High-yield bonds can also be repackaged into collateralized debt obligations (CDO), thereby raising the credit rating of the senior tranches above the rating of the original debt. The senior tranches of high-yield CDOs can thus meet the minimum credit rating requirements of pension funds and other institutional investors despite the significant risk in the original high-yield debt.

High-yield bond indices
See also: Bond market index
High-yield bond indices exist for dedicated investors in the market. Indices for the broad high yield market include the CSFB High Yield II Index (CSHY), the Merrill Lynch High Yield Master II, and the Bear Stearns High Yield Index (BSIX). Some investors, preferring to dedicate themselves to higher-rated and less-risky investments, use an index that only includes BB-rated and B-rated securities, such at the Merrill Lynch BB/B Index. Other investors focus on the lowest quality debt rated CCC or Distressed securities, commonly defined as those yielding 1000 basis points over equivalent government bonds.

He (letter)

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Hē
Arabic Syriac Hebrew Aramaic Phoenician
ﻫ,ﻩ ܗ ה
Phonemic representation (IPA): h
Position in alphabet: 5
Gematria/Abjad value: 5
He is the fifth letter of many Semitic alphabets, including Phoenician , Aramaic, Hebrew ה, Syriac ܗ and Arabic hāʼ ه. Its sound value is a voiceless glottal fricative ([h]).

The Phoenician letter gave rise to the Greek Epsilon, Etruscan 𐌄, Latin E and Cyrillic Ye. He, like all Phoenician letters, represented a consonant, but the Latin, Greek and Cyrillic equivalents have all come to represent vowel sounds.

Origins
In Proto-West Semitic there were still three voiceless fricatives, uvular ḫ glottal h and pharyngeal ḥ. In the Wadi el-Hol script, these appear to be expressed by derivatives of

ḫayt "thread",
hillul "jubilation", compare South Arabian h, ḥ, ḫ, Ge'ez ሀ, ሐ, ኀ, and
ḥasir "court". In the Proto-Canaanite alphabet, ḫayt and ḥasir are merged into Heth "fence", while hillul is replaced by He "window".

Arabic hāʼ
Arabic alphabet
ﺍ ﺏ ﺕ ﺙ ﺝ ﺡ
ﺥ ﺩ ﺫ ﺭ ﺯ س
ﺵ ﺹ ﺽ ﻁ ﻅ ﻉ
ﻍ ﻑ ﻕ ﻙ ﻝ
ﻡ ﻥ
ه‍ ﻭ ﻱ

History · Transliteration
Diacritics · Hamza ء
Numerals · Numeration
v • d • e
The letter is named hāʼ, and is written is several ways depending in its position in the word:

glyph
stand alone at the beginning in the middle at the end
ه هـ ـهـ ـه

Hāʼ is used as a suffix (with the harakat dictated by I`rab) indicating possession, specifically indicating that the noun marked with the suffix belongs to a specific masculine possessor; for example, كتاب kitāb ("book") becomes كتابه kitābihi ("his book") with the addition of final hāʼ; the possessor is implied in the suffix. A longer example, هو يقراء كتابه, (huwa yaqraʼ kitābuhu, "he reads his book") more clearly indicates the possessor.

The feminine form of this construction is ـها -hā.

He in Hebrew
Hebrew alphabet
א ב ג ד ה ו
ז ח ט י כך
ל מם נן ס ע פף
צץ ק ר ש ת
History · Transliteration
Niqqud · Dagesh · Gematria
Cantillation · Numeration

Pronunciation
In modern Hebrew, the letter represents a voiceless glottal fricative. /h/ may also be dropped, although this pronunciation is seen as substandard.

Also, in many variant Hebrew pronunciations the letter may represent a glottal stop. In word-final position, He is used to indicate an a-vowel, usually that of qamatz (ָ), and in this sense functions like Aleph, Vav and Yud as a mater lectionis, indicating the presence of a long vowel.

He, along with Aleph, Ayin, Resh, and Heth, cannot receive a dagesh. Nonetheless, it does receive a marking identical to the dagesh, to form He-mappiq (הּ). Although indistinguishable for most modern speakers or readers of Hebrew, the mapiq is placed in a word-final He to indicate that the letter is not merely a mater lectionis, but that the consonant should be aspirated in that position. It is generally used in Hebrew to indicate the third-person feminine singular genitive marker. Today such a pronunciation only occurs in religious contexts, and then often only by careful readers of the scriptures.

Significance of He
In gematria, He symbolizes the number five, and when used at the beginning of Hebrew years, it means 5000 (i.e. התשנד in numbers would be the date 5754).

Attached to words, He may have three possible meanings:

A preposition meaning "the", "that", or "who" (as in "A boy who reads"). For example, yeled - a boy, Hayeled - the boy.
A prefix indicating that the sentence is a question. (For example, Yadata - You knew, Hayadata? - Did you know?)
A suffix after place names indicating movement towards the given noun. (For example, Yerushalayim - Jerusalem, Yerushalaymah - towards Jerusalem.)
He, being five in gematria, is often found on amulets, symbolizing the five fingers of a hand, a very common talismanic symbol.

In Judaism
He is often used to represent the name of God, as He stands for Hashem, which means The Name and is a way of saying 'God' without actually saying the name of God. In print, Hashem is usually written as He with a chupchik: 'ה.

At the seder, during Yachatz there is a tradition to break the matzah into the shape of the letter He.

Syriac He
Syriac alphabet
ܐ ܒ ܓ ܕ
ܗ ܘ ܙ ܚ ܛ ܝ
ܟܟ ܠ ܡܡ ܢܢ ܣ ܥ
ܦ ܨ ܩ ܪ ܫ ܬ
In the Syriac alphabet, the fifth letter is ܗ — He (ܗܐ). It is pronounced as a [h]. At the end of a word with a point above it, it represents the third-person feminine singular suffix. Without the point, it stands for the masculine equivalent. Standing alone with a horizontal line above it, it is the abbreviation for either hānau (ܗܢܘ), meaning 'this is' or 'that is', or halelûya (ܗܠܠܘܝܐ). As a numeral, He represents the number five.

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