Loans Versus Bonds Relative Value: Week of September 10
Yet another meandering week in leveraged land, this time however one of convergence after several continuing weeks of secured-unsecured divergence. For the most part the moves were noise, with a nominal widening in loans by 2 bps, accompanied by a 24 bps tightening in bonds. The key movers in loan land were Sungard Data and Ticketmaster, which widened by 60 and 95 bps, respectively. In bond land Neiman Marcus was the only name that stood out, tightening by about 76 bps.
Look for continued drift as bonds and loans either converge in a rising equity market, or diverge if the dollar strenghtens. Everything now is purely a function of how quickly Ben Bernanke succeeds in debasing the greenback, the rest (fundamental et al) is mostly noise, especially as quants keep taking advantage of a listless, volumeless market to run their momentum strategies ever higher.