These soaring interest rates on risky debt are, in effect, a prophecy of future troubles for the world economy.

Economists have warned that making banks buy risky sovereign debt will not help the crisis.

With the billions of dollars at their disposal, the two buy up large chunks of the most senior - and least risky - debt, establishing a bulkhead.

"The default rate has gone up because a lot of risky debt was issued" in 1997 and early 1998.

And investors have been pouring money into junk bond mutual funds at twice the pace of a year ago, reflecting appetite for this high-yielding but risky debt.

Many institutional investors are reluctant to buy, or are banned from buying, such risky debt.

Bombardier's pension fund has a large deficit, and a unit that finances sales of the company's products holds a large portfolio of risky debt.

In that way, it was able to retire more debt at a lower cost, because the riskier junior debt had fallen further.

Their analysis was extended to include the effect of taxes and risky debt.

Financial panic of 1890 precipitated by the need to guarantee Barings Bank's risky debts in Argentina.