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Loans Versus Bonds Relative Value: Week of October 22
The loan-bond convergence has hit silly levels. Last week not only did average loan and bond spreads for the indicative universe hit 2009 tights, but the spread between the two asset classes hit what is starting to seem like a silly (and 2009 record) level at 236 bps, down from the previous tight at 251 bps. The average loan (for rather highly leveraged companies) is about to breach 300 bps which absent the government soon nationalizing the entire corporate finance world seems simply ridiculous. The same could be said for the average bond spread at 654 bps. The biggest swing mover were Cenveo loans which two weeks ago widened by the amount they tightened in the past week.
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When I click the charts they don't enlarge.
fixed
Is this the difference between the rates between money lent on the market (bonds) and money lent from a bank (loan)? I still have not had an opportunity to learn about finance. Any tips would be appreciated.
Go to the Markit website at http://www.markit.com. The background about the LCDX, ITraxx LevX, and CDS indices is a good place to start your research.