the most major drawback to buying these corporate bonds is that i must buy a minimum of 10 bonds through my online broker. since mcdonald gives the specific cusip, you are able to order just the actual bond he recommends at or near his suggested price. there have been a few instances where i was unable to get the bond due to price and/or lack of availability, but overall buying has not been an issue (nor selling at my requested price).

mcdonald uses a staggered maturity date for the bonds and usually doesn’t go out more than 3 to 4 years from the current date, thus negating the inflation issue.

i don’t mean to be a shrill for this service but it has been by far the most worthwhile service that i have subscribed to.

Then again, “junk” or not depends, according to most opinions, on the ratings agencies, and does anyone trust them anymore? If the annual yield is dramatic, at perhaps 15% a year or more, we’d probably be better off considering any bond to be a bit risky, and if it has an implied return of 30, 40, 50%, we certainly ought to consider that there’s a good chance of default, bankruptcy, or some kind of cram-down deal for bondholders … the real gains come if you can figure out which ones are considered junk by the market, but which will actually perform and pay you back your principal.

It would seem to me that the viability of these bonds is dependent upon two things: How many aircraft deliveries are deferred and how much the company’s financing costs will rise as part of the AIG bailout.