Investors Burned as Companies Go Under

Once upon a time, bondholders could recoup 40% of their investment if a company they lent to went belly up. But this year they're fighting over scraps and could sometimes walk away with almost nothing. As interest rates fell in recent years investors bargained away protections in return for higher returns. This has come back to haunt them. I asked Daniel Lacalle what this inability to pay lenders back tells us about the financial state of companies this year. Lacalle is the Chief Economist at the Tressis hedge fund.