Michael Milken – creator of the high-yield bond market
Michael Milken is an American philanthropist and popular economist, mainly known for his organization of the garbage bonds market. The future billionaire was born in 1946, and in 2010 his fortune was estimated by Forbes magazine at $2 billion. Thus, Milken found himself on the 488th line in the top 500 rich people of the planet.
Michael Milken is from Los Angeles and his parents were relatively wealthy jews. Michael had a high school education in Birmingham. Then, in 1968, he graduated from Berkeley University and entered the MBA department at Penn State University. After successfully completing his studies, Milken took his first serious job at Drexel Burnham Lambert in 1970. 20 years later, he was convicted of securities fraud. Michael was supposed to be in prison for 10 years, but was released two years later. His career story inspired writer Coney Brooke, who published the book “Predator’s Ball” about the features of working in the financial market.
Michael Milken and his junk bonds
In the eighties, Milken created such an extensive network of junk bond buyers that capital could be obtained for large deals in a matter of hours. The consequences were not so good: some investors thoughtlessly invested in high-yield deals and lost money. It was said that Milken could find $1 billion to invest in MCI Communication in just 60 minutes, and then on the phone. Among the clients of Milken at that time, there were many communications companies, as this market is actively growing. In addition, Milken had close partnerships with Steve Wynn, the owner of the casino, and many middle and small entrepreneurs who previously had no access to large amounts of money. All of these small businesses started working with Drexel Burnham to find services to issue and sell ordinary trash bonds.
Of course, Michael Milken has put his handі to the success of many businessmen who became known in the 80s of last century. Milken always said that there is a lack of talent, and capital can always be found. He was actively involved in investing in Nevada – this state was one of the most actively growing for several years. Milken raised money for the gaming industry, magazines and newspapers, developers and many other areas.
The way Milken was able to quickly raise the right amount of money caused the explosive growth of many firms that used borrowed money to buy out other, smaller companies. With a “letter of guarantee” from Milken, such firms could earn money just by threatening to buy back a large company in which they had previously bought large blocks of shares. The fact that Milken was very easy to move through the financial market was also due to the fact that other companies did not want to compete with him, fearing for reputation and cooperation with existing large customers.
