We Love Junk

Robin Banerjee, Managing Director, Caprihans India, talks about ‘junk bonds’ – a non-investment grade fixed-income debt instruments providing higher yield, and discusses the junky behaviour of the industry and individuals.

- Robin Banerjee

Who does not like a clean and pristine beach? Is it not wonderful to visit a clean and neat restaurant? When sick, nothing like being taken care of by a spotless, hygienic hospital.

But you will be surprised that such human behaviour advocating neatness and tidiness is not displayed always. In fact, most of us, love our junk.

Look no further than our workplace. The shelves, the cupboards, the racks – most probably will contain lots of junk. Studies show that humans generally love to retain old papers thinking, some day it will be of some use. The truth is, there is more than 90 per cent chance that old papers will never be touched. So why not dispose them? But no – we love the junk!

Look at our own home. Open the drawers – and we will find most of them containing junk – paper, letters, invitations, cards, et al. Most of it needs to be discarded. Look at the dressing table or the fridge tops – it may be containing perfumes and cosmetics which could be outdated and harmful to use. But we retain them for posterity. We love our junk!

JUNK BONDS

Let us divert our attention to the world of finance. Even this suave field is not devoid of junk. You have heard of ‘junk bonds’ – a non-investment grade fixed-income debt instruments providing higher yields. They are called junk bonds due to its inherent nature of higher risk of defaults, where borrowers are financially stretched.