To start, I'll underscore the importance of the bond market and how big it is.
You used the example of Bell Canada. If my memory serves me correctly, they have about $12 billion of unsecured bonds outstanding. These people would rank equally with pensioners. They have zero secured bank lines in place; they have a few hundred million dollars of suppliers outstanding, so it is critical. The bond market is essentially the lifeblood of these companies for funding.
Who owns these things? The corporate bond market in Canada is about $500 billion or so, and it's grown significantly over the last 10 years. The mix of who owns these bonds is a combination of many pension funds, many investment counsellors, mutual funds, and a large segment of retail investors, but in the end I don't think you can necessarily separate these into institutional and retail investors, because at the end of the day, this is our money being managed. For any of you who have a mutual fund, the chances are that the money belongs to you at the end of the day.
Now, the people who own these bonds are not 25-year-old people starting their careers and going out to buy corporate bonds. Corporate bonds, in the bond market in general, are deemed to be safe, very low-risk, low-volatility investments. The people who own these bonds are people who are a few years from retirement or people who are already retired and living on the monthly interest they receive from the bonds. These are the people who invest in this market and are most at risk.
With regard to your second point about what happens when a company goes into bankruptcy, I think on Tuesday a lot of the focus was on junk bond holders who are trying to profit from this situation. Really, the people who lose are not the junk bond holders. As soon as a company goes into bankruptcy, a lot of these institutions and the pension funds out there are not allowed to hold non-investment-grade bonds. They can't hold junk bonds, so they've already lost 50% of their investment. It's already been destroyed as soon as the company goes into bankruptcy.
Now they have to sell it; someone has to step forward and pay for it, and that's generally where the transfer comes in to some of the distressed bond funds or hedge funds that you look at. Those people are taking on a very large risk and looking for very large returns from it, but essentially the damage has really been done to the original investors, those people who owned the bonds in the first place and who have lost half their wealth.