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Show ___ The SaltLake Tribune BUSINESS Sunday, March 31, 1996 E5 Junk Bond Market Shakes Off Ratty Reputation, Maturesin the 90s ByDavid Henry USA TODAY NEWYORK — Junk bondsare having a great year. The long-derided market is attracting new moneyfrom individual investors, bookingthe best returns since January of any bond market and financing a flood of new debt for companies Will the market cool? Certainly. Will junk bonds go away? No. Twelveyears after Michael Milken brought junk bonds to the fore as a tool for financing everything from cabletelevision to hostile takeovers to over-leveraged buyouts, junk underwriting and trading have grownup into a real est yields, account for about onefifth of outstanding corporate bonds. They are considered junk because they have not been deemed “investment grade” for creditworthiness by ratings ser- vices. The market has survived big hits: @ Milken was arrested in 1989 and imprisoned for federal felonies among his dealings. @ The country washit by recession and credit crunch, toppling the worst-financed of junk debtors and sending the default rate soaring to over 10 percent in 1990. Milken’s firm, Drexel Burn- ham Lambert, which once underwrote more than half of new junk bonds, collapsed. The govern- mentforced savings and loans to sell their junk. Mutual fund investors fled, forcing portfolio managers to raise cash by selling bonds. Trading came to a near standstill @ Interest rates spiked in 1994. producing one of the worst years for bonds. “The market has matured sig- nificantly,’ said Ralph Stell- macher, an Oppenheimer Management portfolio manager ized, each year holds about a halfdozen industry-specific confer- writes more than 20 percent of veteran now running high yield Milken used to gather market playersin BeverlyHills for an an- Lufkin & Jenrette. nual conference nicknamed “The Predators’ Bali” for attracting takeover players and corporate raiders. Last Friday, Bear Stearns ended a three-day conferencein Manhattan for 1,000 people. Merrill Lynch, having found investment managers increasingly special- have junk bonds, up from a few hundred in the 1980s. Today's borrowers come from morein- investing in high-yield bonds Evidenceincludes: @No Wall Street firm dominates the market. No firm undernewjunk issues now More than 800 companies ences. “All the firms have them. said Bennett Goodman, a Drexel sales and trading at Donaldson. dustries, spreading risk over more of the economy. Credit quality has improved. Only17 percent of newissuesfall in lower ratings of creditworthiness compared with 66 percentin 1988. Cash flow, the critical mea- WThough predators and big sure of a company’s ability to ser- buyout specialists are in eclipse the value of newbonds coming to market the past four years has pense by2.3 times on average, up from 1.3 in 1988, according to topped 1980srates. Nowless than 20 percent of proceeds from junk go for mergers and acquisitions, down from more than 60 percent in the 1980s. vice bonds, exceeds interest exBear Stearns Martin Fridson, veteran junk analyst at Merrill Lynch, said “The market has not created the volume of default-prone bonds thatit did in 1987 and 1988." market. Nowit is a forum where investors generally get about whattheypay for, an arena dominated byno firm or person, and a place where prices go up and down and excitementalternates with boredom Junk bonds, also known as high- yield bondsfortheir higherinter- POLICING THE _PROFESSIONALS Two registered nurses who took three teen patients from a psychi- atric hospital and allowed them to use drugs before going to a Grate- ful Dead concert have been ac- cused of unprofessional conduct by the Utah Division of Occupa- tional and Professional Licensing (DOPL). Carol Anna Burrup and Bertie B. Bott had finished their shifts at Rivendell of Utah on Feb. 21, 1995, when theyarranged for a “therapeutic leave of absence’ for three patients who were 16 and 17 years old. The nurses do- cumented onpatients’ charts that the purpose of the leave was to “go shopping and to eat.” Instead. according to DOPL, the nurses bought cigarettes for the teens and drove them to Burrup’s home, where Burrup smoked marijuana with them. The group left Burrup’s home and bought beer before heading to the Delta Center for a Grateful Dead concert. During the concert, the nurses became separated from their charges, one of whom went into a “mosh pit” where she took psychedelic drugs. After the concert, Burrup purchased more beer and the group went back to her home to watch a video that showed nudity and intimate sexual acts. Upon returningto the hospital, the teens wereinstructed by Burrup to say they had been to the mall. Both nurses were subsequently fired by Rivendell and criminally charged. Last August Bott pleaded guilty to three counts of contributing to the delinquencyof a minor, but the plea was held in abeyance for six- months. Burrup pleadedguiltyin February to three felony counts of distribution of a controlled substance and wassentenced to 6 months homeconfinement and 3 years probation. The DOPL charges could result in suspension or revocation of the nurses’ licenses. Thelicense of Sandyregistered nurse Penelope A. Meadows was Suspended indefinitely after she admitted obtaining prescription drugs from pharmaciesbycalling in numerous phonyprescriptions. Meadows’ licensewill remain suspended until she completes drug OUR FREE CHE‘ KING IS ONE OF THE BEST DEALS IN THE COUNTRY. treatment. Following the suspen- sion, Meadows’license will be on probation for three years and she will be required to undergo ran- dom drug testing. Her practice must be supervised by another registered nurse. Joan S. Glade’s registered nurse license was revoked in 1984, due to alcohol abuse. She subsequentlygot her license reinstated, but in January 1996, she failed to show upfor a scheduled shift at a Salt Lake City hospital because she had been drinking The Utah Division of Occupational and Professional Licensing has placed her license on probation for three years, ordered her to undergo random drug testing submit to a mental-health examination and undergo therapy. Her practice must be supervised. Licensed practical nurse Debo- rah Y, Woodruff used fictitious name onher license application and told prospective employers she had completed studies for a registered nurse degree at the University of Utah. She also gave an employer a copy cf her LPN license that had been altered to show she was an RN. State licensing officials say Woodruff never was enrolled at the U. of U., and they have ordered her to undergo a mental health exam. 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