Loans Versus Bonds Relative Value: Week of August 27
The secured-unsecured divergence continues, with leveraged universe loans tighter in the last week by 5 bps, back to unchanged with two weeks ago, while bonds continue drifting gradually wider, 11 bps wider over the last week and over 70 bps over the past two weeks.
The biggest underperformers in the unsecured world were the uber-beta, dramamine pushing companies such as TRW and West Corp, both of which exploded over 150 bps. If history is any indication, next week it will be Select Medical's turn to turn the rollercoaster on turbo in either direction. In the meantime, credit investors curse that the equity bubble has made its way into the otherwise more normal and rational credit market.
Source: LPC LoanConnector