Angel Bond

  

Categories: Bonds

Just call me angel of the funding, angel...Yeah.

Just like angels are usually a welcome sight, an angel bond is one that has a medium or high rating. If the three big bond rating agencies (Moody’s, S&P, and Fitch) rate a bond BBB or Baa3 and higher, the bonds are considered low risk. However, they also provide a lower interest rate since the issuer has a high credit rating.

Most municipal bonds and all U.S. Treasury bonds are considered to be angel bonds. The agencies rate a bond when it is first issued. However, they may lower the rating over time if a municipality, for example, is experiencing economic challenges such as filing for bankruptcy (Detroit, 2013), or anything that increases the risk that they might not be able to pay back the principal.

If a bond was once an angel bond but then is downgraded to a “junk” rating, it is known as a fallen angel. Think of JC Penny and Toys Are Us and Sears and a whole slew of soon-to-be-lunch-for-Amazon companies.

Related or Semi-related Video

Finance: What are Angel Investors and Se...8 Views

00:00

Find it a la shma What are angel investors and

00:05

seed funds Just call me angel Thanks That's All right

00:14

It's early in the morning here and we just do

00:16

that sometimes Yeah All right Well an angel investor is

00:19

typically i'm sorry Won't sing again An angel Investors typically

00:23

someone who was wildly successful in an entrepreneurial venture of

00:27

their own They feel a kind of moral obligation to

00:31

recycle their winnings And in most cases very very early

00:35

stage companies are so extremely risky with failure rates over

00:40

ninety nine percent Well that it takes some kind of

00:43

angel to come in and invest the first few hundred

00:46

grand Get them started building that nose picking device the

00:50

world has always wanted no And since in most cases

00:55

very early start ups have absolutely no idea what they're

00:59

worth So many initial angel investments carry no price meaning

01:05

that there was only one term carried by the money

01:08

invested It will be valued at say a ten percent

01:13

or whatever number discount toe whatever valuation The next round

01:18

if there is one values the company at while the

01:22

first few million bucks into google by a small handful

01:25

Of already successful silicon valley types ended up being converted

01:29

into stock in their initial or a round which was

01:33

done at a whopping almost seventy million dollars It was

01:37

done at the height of the first internet bubble and

01:39

while timing is everything sometimes google's original investment netted it's

01:44

angel investors some ten thousand times their money and spawned

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a whole many industry in angels getting together hoping tio

01:54

you know do more googles When angels pool their money

01:57

they create what is called a seed fund think seeds

02:02

planted in the ground to eventually bear fruit You know

02:05

like that And when seed investors are right yeah sometimes

02:08

they make that ten thousand times their money thing and

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yahoo google facebook and a small handful of others all

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live in this lofty world of ten thousand xers We're

02:19

on ly the loftiest of angels fly q's call me

02:24

change All right i'll stop Hey if you've got google

02:27

money and you can call me whatever you want No

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