Loans Versus Bonds Relative Value: Week of July 30
The ripfest is unending. Only 6 HY indicative bonds are trading wider of a 1,000, and 6 loans are risky enough to merit 600 bps or more. A combined 4 bonds and loans were wider for the week out of 60. And in the absence of perma yoyo TRW going either 500bps wider or tighter, it was Neiman Marcus' turn to shine in the "ridiculous gyrations" corner.
This is pure unadulterated greed and, for lack of a better word, insanity. 5x leveraged companies can easily issue new bonds at 8%, with investors flipping them five minutes post break for 150 bps. And somehow nobody has flashbacks to the credit frenzied summer of 2007.
Welcome to the new (much more temporary) credit bubble: we are all happily (and cognizantly) in it.