Modern corporate finance
The advent of the securitisation market and the high-yield bond market in the 1970s and 1980s changed the face of western capitalism.
Investment bankers grew rich, but the main change was that companies could borrow more freely. This meant they could grow faster, take more risks and hire new people.
Everyone was touched by these innovations. Companies had more choice on financing. In the US in particular, borrowing increasingly came from the public markets rather than the banking sector, a model that exists to this day and has been slowly migrating to Europe.
High-yield – or “junk” – bonds are the debt issued by lower-quality companies with a higher chance of defaulting. Securitisation is the packaging up of debts and ...
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