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47-590: In 1958, the Mary Carter Paint Company , a New Jersey paint manufacturer, was acquired by a group of investors. James Crosby, son of one of the investors, was appointed to lead the company. With its paint business on the decline, Mary Carter sought to diversify into the land development business. It acquired 1,200 acres of land near Freeport, Bahamas in 1962, followed by a 75 percent interest in Paradise Island in 1966. The company built

94-596: A PriceWaterhouseCoopers audit, the GBPA owes the Bahamian government $ 357 million USD. As of August 2024, GBPA has not paid what the government of The Bahamas says is due. The city was severely impacted by Hurricane Dorian , which stalled above Grand Bahama for 12 hours, caused storm surges between 12-18 feet above normal, killed eight people in Grand Bahama, and destroyed up to thirteen thousand homes. Freeport

141-558: A Public-Private Investment Partnership (PPIP) to buy toxic assets from banks' balance sheets. The major stock market indices in the United States rallied on the day of the announcement rising by over six percent with the shares of bank stocks leading the way. PPIP has two primary programs. The Legacy Loans Program will attempt to buy residential loans from banks' balance sheets. The Federal Deposit Insurance Corporation will provide non-recourse loan guarantees for up to 85 percent of

188-487: A prepackaged bankruptcy plan, bondholders received 78 percent of the company's stock, in exchange for canceling $ 496 million in debt. As part of the deal, Griffin also invested $ 25 million in cash, the company again became publicly traded, and the Paradise Island property was put up for sale. Proceeds from the Paradise Island sale, expected to top $ 250 million, would have allowed Resorts to reduce its debt load to

235-442: A tropical rainforest climate , similar to South Florida's . According to Köppen Climate Classification ( Af ) , more specifically with hot humid conditions that vary only a little throughout the year. Seldom do temperatures drop below 16 °C (60 °F). Average temperatures are around 27 °C (80 °F), with water temperature varying between 22 and 26 °C (72 and 78 °F). The winters are usually mild and dry (with

282-596: A bridge to the island and developed it with hotels and restaurants, and opened the Paradise Island Casino there in 1967. In 1968, Mary Carter sold its paint division and changed its name to Resorts International. Other ventures that the company undertook were short-lived, including ownership of the Biff Burger fast food chain from 1962 to 1976, an investment in an experimental shrimp farm in Mexico in

329-661: A foundation for Sun's previously announced plan to build an $ 800-million casino on the Boardwalk. The Griffin corporate entity became Sun International North America , and Sun's interests in the Mohegan Sun casino were folded into it. Colony Capital , which had purchased Resorts Atlantic City in 2001, revived the Resorts International name in 2005, forming an affiliate company named Resorts International Holdings . The Resorts brand would be attached to two of

376-658: A level that could be serviced by cash flow from the Atlantic City property. However, no serious offer over $ 150 million was received, leading the company to file Chapter 11 again in 1994. The prepackaged bankruptcy plan reduced the company's debt by $ 289 million, and in exchange gave bondholders 40 percent of the reorganized company, plus proceeds from the sale of Paradise Island to South African Sol Kerzner 's hotel firm Sun International . The company changed its name to Griffin Gaming & Entertainment in 1995. Griffin hoped

423-556: A new type of high-yield debt: bonds that were speculative grade from the start, and were used as a financing tool in leveraged buyouts (LBOs) and hostile takeovers . In a LBO, an acquirer would issue speculative grade bonds to help pay for an acquisition and then use the target's cash flow to help pay the debt over time. Companies acquired in this manner were commonly saddled with very high debt loads, hampering their financial flexibility. Debt-to-equity ratios of at least 6 to 1 were common in such transactions. This led to controversy as to

470-427: A particular level. As a result, the lower-rated securities may have a different institutional investor base than investment-grade bonds. . U.S. high-yield bonds outstanding as of the first quarter of 2022 are estimated to be about $ 1.8 trillion, comprising about 16% of the U.S. corporate bond market, which totals $ 10.7 trillion. New issuances amounted to $ 435 billion (~$ 505 billion in 2023) in 2020. Indices for

517-615: A rapidly depreciating asset . Even those assets that might have gone up in value in the long-term depreciated rapidly, quickly becoming "toxic" for the banks that held them. Toxic assets , by increasing the variance of banks' assets, can turn otherwise healthy institutions into zombies . Potentially insolvent banks made too few good loans creating a debt overhang problem. Alternatively, potentially insolvent banks with toxic assets sought out very risky speculative loans to shift risk onto their depositors and other creditors. On March 23, 2009, U.S. Treasury Secretary Timothy Geithner announced

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564-520: A second casino in 1978, assuming management of El Casino in Freeport. It sold the casino in 1983. The company in 1983 began construction of the Taj Mahal casino, adjacent to the Resorts International casino, with an estimated budget of $ 250 million. The Resorts Casino Hotel had seen declining profits after 1979, as it faced competition from newly opened Atlantic City casinos, and a general slump in

611-604: A takeover more difficult. Resorts purchased Chalk's International Airlines , a small airline offering seaplane service between Florida and the Bahamas, in 1974; the company would operate the airline until selling it in 1991. Resorts executives traveled the world looking for potential casino sites. Finally, Resorts took an interest in Atlantic City, New Jersey in the lead-up to a 1976 voter referendum to allow casino gambling there. The company purchased large tracts of land in

658-453: A takeover target. The Taj Mahal had encountered construction problems, and Crosby's heirs, lacking experience in large development projects, doubted their ability to complete it successfully. Real estate developer Donald Trump , who owned two Atlantic City casinos, beat out several other bidders to purchase a controlling stake in the company from Crosby's family for $ 79 million in July 1987. Trump

705-479: Is located just 108 kilometres (67 mi) off the coast of Palm Beach, Florida , and on the major EW–NS shipping routes . This has positioned it as an ideal centre for international business. Consequently, a growing number of international companies use Freeport as a business site. Parks include the Rand Nature Centre, named after its founder James Rand; Petersons Cay, a small isle about 300 yards off

752-654: Is often promoted as Freeport/Lucaya. Most hotels on the island are located in Lucaya along the southern shore facing the Northwest Providence Channel. The primary shopping venue for tourists is the Port Lucaya Marketplace in Lucaya. Recovery from the 2004 Hurricanes Jeanne and Frances took nearly a decade and led to closure of the older shopping venue International Bazaar and neighboring Bahamas Princess Resort and Casino . Freeport

799-414: Is twin towns and sister cities with Lucaya Junk bonds In finance , a high-yield bond ( non-investment-grade bond , speculative-grade bond , or junk bond ) is a bond that is rated below investment grade by credit rating agencies . These bonds have a higher risk of default or other adverse credit events but offer higher yields than investment-grade bonds in order to compensate for

846-650: The Chicago Tylenol murders and the Bhopal disaster , and arranging safe passage to the Bahamas for the Shah of Iran and deposed Nicaraguan dictator Anastasio Somoza . Freeport, Bahamas Freeport is a city , district and free trade zone on the island of Grand Bahama of the northwest part of The Bahamas . In 1955, Wallace Groves , a Virginian financier with lumber interests in Grand Bahama ,

893-577: The free-trade zone , under special powers conferred by the government under the Hawksbill Creek Agreement, which was extended until August 3, 2054. The agreement also increased the land grants to 56,000 hectares (138,000 acres). The Hayward and St. George families own the GBPA, which they have used to fund estates in Great Britain such as Dunmglass , the purchase of the football club Wolverhampton Wanderers F.C. , and to pay

940-459: The Taj Mahal from the company for $ 273 million. Griffin's purchase was financed with high-interest junk bonds sold by Michael Milken . Less than a year after Griffin's takeover, Resorts began defaulting on interest payments to bondholders, due to the company's high debt load and inability to sell undeveloped real estate assets. In 1989, Resorts entered Chapter 11 bankruptcy protection . Under

987-823: The U.S. Treasury's Troubled Asset Relief Program monies, private investors, and from loans from the Federal Reserve's Term Asset Lending Facility (TALF). The initial size of the Public Private Investment Partnership is projected to be $ 500 billion. Nobel Prize–winning economist Paul Krugman has been very critical of this program arguing the non-recourse loans lead to a hidden subsidy that will be split by asset managers, banks' shareholders and creditors. Banking analyst Meredith Whitney argues that banks will not sell bad assets at fair market values because they are reluctant to take asset write downs. Removing toxic assets would also reduce

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1034-594: The US Treasury to seek congressional appropriations to buy those assets in September 2008 to prevent a systemic crisis of the banks. Such assets represent a serious problem for purchasers because of their complexity. Having been repackaged perhaps several times, it is difficult and time-consuming for auditors and accountants to determine their true value. As the recession of 2008–09 hit, their value decreased further as more debtors defaulted, so they represented

1081-580: The United States, Italy, and Canada. Freeport is also served by domestic Bahamian ferry services to other islands, and an international ferry connection to Miami. The Grand Bahama Port Authority (GBPA) operates the free trade zone, under the Hawksbill Creek Agreement signed in August 1955 whereby the Bahamian government agreed that businesses located in the Freeport area would pay no taxes before 1980, later extended to 2054. The area of

1128-643: The casino industry. The need to diversify was again apparent. The company offered to purchase Trans World Airlines in 1985, but was rejected. Resorts then returned its focus to Pan Am, buying an 11 percent stake in the airline. By early 1986, Resorts was reported to be exploring expansion options in West Virginia, Florida, and Louisiana, where it was participating in lobbying efforts to legalize gambling, and searching for potential casino sites. Crosby died unexpectedly in April 1986, and Resorts International became

1175-401: The city, including the historic Chalfonte-Haddon Hall. When the referendum passed, Resorts was prepared to quickly renovate the hotel, opening it in 1978 as the city's first casino, Resorts International Casino Hotel . The property was an immediate success, and the company saw its revenue increase from $ 59 million in 1977 to $ 407 million in 1979. Resorts expanded its footprint in the Bahamas to

1222-592: The company's other casinos, Resorts Tunica and Resorts East Chicago . International Intelligence Inc. , commonly known as Intertel , was a private security firm majority-owned by Resorts International. Resorts financed the establishment of Intertel in 1970, as an outgrowth of Crosby's efforts to keep the company's Bahamas casino free of organized crime influence. Intertel was responsible for security at Resorts properties, and offered its services to other hotels and large corporations. Its other high-profile work included providing security for Howard Hughes , investigating

1269-473: The construction, but only if he owned the entire company. Television producer Merv Griffin made an unexpected offer to purchase the company for $ 35 a share, sparking a highly publicized takeover battle, with Trump and Griffin filing lawsuits against each other. The two ultimately reached a settlement, which was executed in November 1988, with Griffin purchasing the company for $ 365 million, and Trump purchasing

1316-440: The credit rating of the issuer had slipped and the possibility of default increased significantly. These bonds are called "fallen angels". The investment banker Michael Milken realized that fallen angels had regularly been valued less than what they were worth. His experience with speculative grade bonds started with his investment in these. In the mid-1980s, Milken and other investment bankers at Drexel Burnham Lambert created

1363-545: The early 1970s, ownership of the Marine World/Africa USA theme park in California from 1972 to 1979, and an aborted deal to purchase half of slot machine maker Williams Electronics in 1978. Crosby led Resorts on several forays into the airline industry over the years. The company made efforts towards acquiring Pan American World Airways in 1969, but backed down after Congress intervened to make such

1410-578: The economic and social consequences of transforming firms through the aggressive use of financial leverage. In 2005, over 80% of the principal amount of high-yield debt issued by U.S. companies went toward corporate purposes rather than acquisitions or buyouts. In emerging markets, such as China and Vietnam, bonds have become increasingly important as short term financing options, since access to traditional bank credits has always been proved to be limited, especially if borrowers are non-state corporates. The corporate bond market has been developing in line with

1457-786: The exception of some rainfall due to cold fronts ), while the summers are usually hot and wet. Although a freeze has never been reported in The Bahamas, snow was reported to have mixed with rain in Freeport in January 1977, the same time that it snowed in the Miami area. The temperature was about 4.5 °C (40.1 °F) at the time. The temperature of 4.5 °C (40.1 °F) was tied, on 30 January 2022. Tourism draws more than 1 million visitors per year, but has diminished since 2004, when major hurricanes Hurricane Frances and Hurricane Jeanne made landfall; in 2016, Hurricane Matthew hit

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1504-409: The general trend of capital market, and equity market in particular. High-yield bonds can also be repackaged into collateralized debt obligations (CDO), thereby raising the credit rating of the senior tranches above the rating of the original debt. The senior tranches of high-yield CDOs can thus meet the minimum credit rating requirements of pension funds and other institutional investors despite

1551-483: The high-yield market include: Some investors, preferring to dedicate themselves to higher-rated and less-risky investments, use an index that only includes BB-rated and B-rated securities. Other investors focus on the lowest quality debt rated CCC or distressed securities , commonly defined as those yielding 1,000 basis points over equivalent government bonds. The original speculative grade bonds were bonds that once had been investment grade at time of issue, but where

1598-408: The increased risk. As of 2024, high-yield bonds have a higher yield than U.S. Treasury securities . As indicated by their lower credit ratings , high-yield debt entails more risk to the investor compared to investment grade bonds. Investors require a greater yield to compensate them for investing in the riskier securities. In the case of high-yield bonds, the risk is largely that of default:

1645-457: The island. In early September 2019, Hurricane Dorian moved over the area and stalled for over a day, causing extensive devastation. Several cruise ships stop weekly at the island. Much of the tourist industry is centered on the seaside suburb of Lucaya , owing its name to the pre-Columbian Lucayan inhabitants of the island evidence of whom has been found on the island. Freeport features at least two Junkanoo festivals near New Year's. The city

1692-460: The land grants within which the Hawksbill Creek Agreement applies has been increased to 56,000 hectares (138,000 acres). Freeport is a 600 km (230 sq mi) free trade zone on Grand Bahama Island, established in 1955 by the government of The Bahamas. The city of Freeport emerged from a land grant comprising 20,000 hectares (50,000 acres) of swamp and scrub to become a cosmopolitan centre. The Grand Bahama Port Authority (GBPA) operates

1739-676: The multi-million dollar legal fees incurred due to disputes between the two families. Meanwhile, inheritance and contract disputes within the Hayward family has likewise incurred multi-million dollar fees. Bahamian politicians such as the FNM opposition leader Michael Pintard have described the legal dispute between the Haywards and St. Georges as damaging to Freeport's economy, while in March 2024 Prime Minister Philip Davis asserted that according to

1786-474: The new name would emphasize his connection to show business, as the company sought to expand into television and live entertainment. Griffin Gaming announced plans in March 1996 to build a new casino hotel next to Resorts. In December 1996, Sun International purchased the company for $ 293 million in stock and assumed debt. Sun hoped the acquisition would gain it quick access to the burgeoning Atlantic City casino market, and that Griffin's land holdings would provide

1833-401: The possibility of default in the high-yield bond sector. Institutional investors (such as pension funds , mutual funds , banks and insurance companies ) are the largest purchasers of high-yield debt. Individual investors participate in the high-yield sector mainly through mutual funds. Some institutional investors have by-laws that prohibit investing in bonds which have ratings below

1880-519: The possibility that the issuer will be unable to make scheduled interest and principal payments in a timely manner. The default rate in the high-yield sector of the U.S. bond market has averaged about 5% over the long term. During the liquidity crisis of 1989–90, the default rate was in the 5.6% to 7% range. During the COVID-19 pandemic , default rates rose to just under 9%. A recession and accompanying weakening of business conditions tends to increase

1927-423: The purchase price of legacy loans. Private sector asset managers and the U.S. Treasury will provide the remaining assets. The second program is called the legacy securities program which will buy mortgage backed securities (RMBS) that were originally rated AAA and commercial mortgage-backed securities (CMBS) and asset-backed securities (ABS) which are rated AAA. The funds will come in many instances in equal parts from

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1974-556: The shore of Grand Bahama; and the Lucayan National Park founded by Peter Barratt, a former architect and town planner of Freeport. The Lucayan National Park is 16 hectares (40 acres) in extent and includes five ecological zones stretching from the south shore to the pineyard. There is an extensive underwater cave system beneath the park. One cave entrance is accessible by stairs at the national park, while other caves are accessible for certified scubas . Freeport features

2021-441: The significant risk in the original high-yield debt. When such CDOs are backed by assets of dubious value, such as subprime mortgage loans, and lose market liquidity , the bonds and their derivatives become what is referred to as "toxic debt". Holding such "toxic" assets led to the demise of several investment banks such as Lehman Brothers and other financial institutions during the subprime mortgage crisis of 2007–09 and led

2068-687: The volatility of banks' stock prices. Because stock is akin to a call option on a firm's assets, this lost volatility will hurt the stock price of distressed banks. Therefore, such banks will only sell toxic assets at above market prices. On 27 April 2010, the Greek debt rating was decreased to "junk" status by Standard & Poor's amidst fears of default by the Greek Government . They also cut Portugal 's credit ratings by two notches to A, over concerns about its state debt and public finances on 28 April. On 5 July 2011, Portugal's rating

2115-408: Was appointed chairman of Resorts International, and said he would complete the Taj Mahal in about a year. As the Taj Mahal's budget had ballooned to $ 930 million, Resorts struggled to find the financing to complete it. With the company claiming to be near bankruptcy in early 1988, Trump made a tender offer to buy all outstanding stock for $ 22 a share, stating that he was willing to personally finance

2162-427: Was decreased to "junk" status by Moody's (by four notches from Baa1 to Ba2) saying there was a growing risk the country would need a second bail-out before it was ready to borrow money from financial markets again, and private lenders might have to contribute. On 13 July 2012, Moody's cut Italy's credit rating two notches, to Baa2 (leaving it just above junk). Moody's warned the country it could be cut further. With

2209-597: Was granted 20,000 hectares (50,000 acres) of pineyard with substantial areas of swamp and scrubland by the Bahamian government with a mandate to economically develop the area. Freeport has grown to become the second most populous city in The Bahamas. The main airport serving the city is the Grand Bahama International Airport , which receives domestic flights from various islands of The Bahamas as well as several international flights from

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