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Loans Versus Bonds Relative Value: Week of July 23
The credit tightening squeeze is about to get silly. Indicative loans averaged a year to date tight of 461 bps while bonds were trading at 905 bps.
As for individual names, TRW continues to hand out Dramamine for the n-th week in a row. This week they are joined by uber-high beta credits Aeroflex, FDC and Neiman Marcus. While neither of these companies is actually cash flow positive, since when is it that bondholders actually cared about such things as leverage or FCF ratios. As there is definitely some idiot out there who will buy your bond from you at 1 point higher, why take the risk of not buying it. And if the company files for chapter 11 in the meantime, well, that's the risk of the market casino.
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What is the check on the silly factor in relative consideration since May 2007 and how do these correlate in the current dynamics and what effect is hyper pseudo liquidity having in these and related spaces?
Glut of Oil.
Glut of Oil even with refiners having made massive cuts in production / refining.
Much Less oil produced and still a glut = clearly a depression.
Oil only being bought by China as a hedge against currency / dollar crash. They are hoarding commodities---not currencies = depression.
Add this to train traffic cut by 50% and UPS and FEDX 50% less shipments.
Our economy is tanking.
thank you!!!! i hope other people out there have been seeing this too (for a while). really enjoyed the 'end of the end of the recession' piece. david's work shows up here as well as in comments in yesterday's gartman letter. put it all together.
oh, and hey, did anybody else notice goldman quietly closing their long-2010-WTI trade a few days ago? hmmmmmmmm!!! for crude with a PT of $85, it sure is odd to close out at a time like this! oh, and didn't they raise their equities estimates recently too? hmmmm..........
And yet another bond sale set up in the mart - nice and bid for the 5 year at 12pm.
Roll up ye indirects - oil is tanking dollar getting bought - run for safety, tin hats at the ready - we're down ..............58 ...a big down day!! ridiculous....
1.92 BTC, 11 bp tail.
boom. roasted.
I suspect that come winter an action like today's will be remembered fondly.
Station Casino parent finally biting the bullet. What, nothing to take public in Shanghai for billions?
is this not reflecting inflation expectations in floating v. fixed instruments?
WHY ARE PEOPLE HERE SO STUPID????????????????????