September was a turbulent month for investors in high-yield corporate bonds, with governments bailing out financial institutions in the US and Europe.The positive news is that regulators are working to bring new capital, both public and private, to stabilise the banking system. Regulators are starting to take the initiative in forcing quick resolutions at the most troubled banks, handing them to stronger competitors and working creatively to contain the risk of contagion. In Ireland, the government put in place a guarantee arrangement to safeguard all deposits, covered bonds, senior debt and dated subordinated debt for two years.This has implications for all other banks within the European Union. In the US, politicians attempted, at first unsuccessfully, to put in place a $700 billion financial rescue package but the package was finally passed by Congress in early October. There are no longer any US investment banks because Lehman Brothers failed, Merrill Lynch merged with Bank of America and Morgan Stanley and Goldman Sachs became commercial banks.In the UK, Lloyds TSB is taking over HBOS with the blessing of the government and Bradford & Bingley has been partially nationalised to protect depositors. The New Star Extra High Yield Bond Unit Trust had no holdings in Lehman, AIG, Washington Mutual and Wachovia but does have a small holding in Bradford & Bingley. None of the fund's bond holdings defaulted during September but the monthly income was lower because there were only 29 accrual days against 32 in the prior accrual period.