I inherited a range of bonds a month or so ago. I have looked at the fact sheets and many (not all) of them include lower rated debt A, BBB, BB, B, and NR.

The returns for the last year have been poor, 2% highest, and some are negative, up to -3% ish.

Concerned about continued impact of CDOs and lower grade debt (and even the supposedly AAA rated debt) eroding the value of the bond funds lower.

Don't want to invest in China right now, already have a little there and expecting a correction. Similarly, I'm expecting there's more pain to come in the global stock markets as the sub-prime mess continues to unfold, so might want to wait a little before putting more into the stock markets.

Don't want to buy more gold at the current price. Nor property!!

That just leaves cash!! Already got 3 bank accounts maxed out up to FSA guarantee limit.

What would you do with the bonds? Do you think they'll nosedive as debt defaults rise? Would you cash them in?

thanks in advance.