Michael Milken: How He Created the High-Yield Bond Market

Michael Milken created the high-yield bond market in the 1970s — enabling capital for 99% of companies previously locked out of public markets. Sixty years later, he's still changing how the world thinks about credit, cancer, and education. Michael Milken is the co-founder of Drexel Burnham Lambert's fixed income division, the architect of the modern high-yield (junk bond) market, and one of the most consequential financiers in American history. Approximately 70 investment firms are headed by leaders who worked with Milken, including founders of Apollo, Ares, Blackstone, Canyon, and Goldman Sachs. What you will learn: • How a conversation during the 1965 Watts riots changed Milken's entire career — and led to the high-yield bond market • Why every conventional wisdom about credit risk in the 1960s was based on incorrect data — and how Milken proved it • The five goals Milken set in 1970 that shaped modern private equity, securitization, and credit markets • How he assessed talent at Drexel: late-night card games, road trips, and 4am interview calls • His diagnosis of prostate cancer in 1993 — given 18 months to live — and how it redirected 30 years of philanthropic work • Why demographic data on China's birth rate should have predicted the real estate collapse a decade before it happened Timestamps: 00:00 Introduction 03:10 Childhood — the Almanac under the pillow 06:45 The Watts riots and discovering credit discrimination 09:40 Going to Wharton, joining Drexel, and the five goals 19:55 The evolution of private credit and securitization today 24:00 Talent assessment — cards, road trips, and 4am calls 36:50 Capital structure, leverage, and lessons from crisis 44:55 Cancer diagnosis and 18 months to live 56:50 Education reform 01:03:20 Closing questions What's your take on Milken's framework for credit risk — does the research still hold in today's private credit market? Reply below. Capital Allocators is the podcast for institutional investors. Host Ted Seides conducts in-depth conversations with the world's leading allocators, managers, and industry thinkers. Subscribe:    / @capitalallocatorspodcast   Visit: https://capitalallocators.com Follow Ted:   / tseides