What happens with defaulted bonds in your portfolio?

[adventurer]

Hello,

 

does anyone have a clue what happens with defaulted bonds in your portfolio? Few decades back one could buy bonds physically so no one could actually take them away from you once they were worthless. But what happens when you bought them electronically into your portfolio and they default? Will the broker simply remove them?

 

If yes, what happens with your claims in case the bonds are being revalued by the original issuer?

 

Thanks for reading!

[Jurgis]

Broker does not remove them. You still have them in your portfolio with zero or whatever price broker puts there. Then you go through BK and either get something or not. It may even happen that you get X (new shares, new bonds), sell them and then later get more because of some additional settlement or whatever. It's all electronically tracked.

[adventurer]

In my case BK probably will not take place which is why I am wondering whether I can buy defaulted bonds into my portfolio electronically. I am waiting for the bonds to fail to buy them, do you think that works?

[Jurgis]

Depends on the bond, the broker, your country, bond country (if different), your account size, etc.

 

My guess is that you won't be able to. But it's a WAG without additional info.

The best is to ask your broker rather than asking here. They should give you definitive answer.  8)

 

Good luck.