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Loans Versus Bonds Relative Value: Week of September 10

Submitted by Tyler Durden on 09/14/2009 10:38 -0400

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.

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Mon, 09/14/2009 - 10:55 | 68684 Anonymous

http://www.msnbc.msn.com/id/31510813/ns/msnbc_tv-morning_meeting#32840069

Mon, 09/14/2009 - 11:09 | 68695 Anonymous

chumbawamba - has broken into the big time with a headline mention over at the evil speculator

http://evilspeculator.com/?p=10844

Mon, 09/14/2009 - 11:12 | 68700 Anonymous

DOW JONES NEWSWIRES

Delinquencies among U.S. commercial mortgage-backed securities' conduit and fusion loans was 3.23% at the end of August, up from a low of 0.22% in mid-2007, according to Moody's Investors Service.

The figure jumped from 0.5% a year earlier and July's 3.02%. On the bright side, the latest increase was less than the average monthly increase since March.

"Although the rate of increase has tapered off in the past six months, it is much too early to count on this trend continuing," said Moody's Managing Director Nick Levidy.

Instead, Levidy warned the rate would resume an upward trend over the next several months.

The commercial real-estate market had held up better than the residential real-estate market until it began to deteriorate quickly at the end of 2008 as the U.S. recession deepened. Retail and hotel properties have been hit especially hard.

Multifamily delinquency rates continued to increase the most, to 5.51% from a low of 0.51% in August 2007, according to Moody's.

The delinquency rate for loans on retail properties grew 0.22% to 3.41% during the month. The previous peak was 0.89% in August 2003.

Moody's said delinquency rates were highest in the South, with delinquencies at 4.66%, up from July's 4.32%. The East was the only region with delinquencies below the national average - with a rate of 1.84%, up from 1.74% a month earlier.

Nevada and Michigan, which have been hurt by high unemployment and slumping real estate values, posted the highest delinquency rates with Nevada at 8.69% and Michigan at 8.55%. Those figures rose from 7.71% and 7.65%, respectively, in July.

-By John Kell, Dow Jones Newswires- 212-416-2480- john.kell@dowjones.com

Mon, 09/14/2009 - 11:27 | 68713 Cognitive Dissonance