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Block Firm to Trade Distressed Debt

Traders Magazine, May 2008

Michael Scotti

Agency shop JonesTrading, known for its large network of equity sales traders, has expanded into a new asset class-distressed bonds. JonesTrading last month began trading the illiquid bonds of troubled companies for two reasons: First, customers demand was strong; and second, it believes that bond trading is migrating toward the equities model of agency trading-particularly distressed bonds. According to Moody's Investors Service, the recent credit crunch and slowing economy have already pushed bond defaults way up-about five times what they were last year during the same period, or $1.4 billion last year compared to $7.27 billion this year. Consequently, it shouldn't come as a surprise that JonesTrading sees distressed bonds as a growth area for the firm.

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