Rating Agency

Frontrunning: May 18

  • Stocks sag as U.S. rate rise expectations revive (Reuters)
  • Clinton, Sanders hit final stretch of nominating contest (Reuters)
  • Bernie Sanders Wins in Oregon, But He Needed Kentucky, Too (NBC)
  • Clinton less than 100 delegates from nomination (The Hill)
  • Trump needs 66 delegates to officially clinch nomination (The Hill)
  • Japan GDP Rebound Not Enough to Stave Off Stimulus (WSJ)

The SPV Loophole: Draghi Just Unleashed "QE For The Entire World"... And May Have Bailed Out US Shale

"The ECB stands ready to buy bonds from Euro Area issuers even when their parent companies are outside of the bloc. Already we can find a number of US, UK and Swiss headquartered names that issue out of SPVs incorporated in the Euro Area. If this trend to SPV issuance catches on, then the ECB’s policies will likely be very reflationary for all credit markets across the globe, and because of a likely refinancing wave – equity markets too."

Deutsche Bank Says World "Past The Point Of No Return" In The Default Cycle

"We continue to live in a low default world for now though. Even though defaults picked up in 2015, B/BB default rates were still comfortably below their long-term average which they have been for well over a decade now with 2009 being the only exception. Indeed last year’s default rate for global Bs (up from 0.9% to 2.7%) was still lower than all of the first two decades of the modern era of leveraged finance up to 2003. So in spite of all the challenges we face this era has been characterized by astonishingly low default rates. There are clear signs the cycle is turning though, especially in the US."

Frontrunning: March 30

  • Bad News Is Great News: Cautious Yellen drives world stocks near 2016 peaks (Reuters)
  • Yellen Spurs Global Stock Rally as Oil Rebounds, Dollar Tumbles (BBG)
  • Trump drops pledge to back Republican presidential nominee other than himself (Reuters)
  • Second judge says Clinton email setup may have been in 'bad faith' (Reuters)
  • Brussels Airport Remains Shut as Police Hunt Third Attacker (BBG)

Catalonia Said To Blackmail Spain On Overdue Bank Loans

Spain and Catalonia are locked in a hilarious staring contest over the latter's unpaid bank debt which Barcelona has essentially demanded that Madrid pay. If Spain says no, Catalonia may well just default, a move that would send yields on SPGB's through the roof. Of course if Spain does pay, Madrid is effectively subsidizing Barcelona's independence bid.

These Are The Energy Bonds Most Likely To Default In The Next Six Months

With Fitch now expecting $40 billion in US energy defaults in 2016, the question is who are the most likely candidates. In the following table, we list the distressed bonds which have an interest payment in the next 6 months - one which they very well may not make - and which will most likely be the first to default.