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Is The Stage Set For A High Yield Meltdown?
We’ve talked a lot lately about HY in general and about the HY energy space more specifically. Recapping, periods of QE in the US saw US HY supply surge 50% above normal levels as issuers sought to take advantage of lower borrowing costs and investors clamored for the relatively higher yields they could get by taking on more credit risk. More recently, struggling oil producers have tapped the market in an effort to stave off insolvency as crude prices plummet, leading directly to a situation where outstanding HY energy bonds account for a disproportionate share of all outstanding debt in the space. With rates set to rise later this year, with crude prices likely to stay depressed for the foreseeable future, and with suppressed liquidity in the secondary market for corporate credit poised to bring heightened volatility, the stage may be set for a high yield meltdown.
$91 billion in Q1 issuance…
...with energy companies tapping investors...
...and higher default rates for issuers who now account for a higher percentage of the market...
...amid rising volatility...
...and falling dealer inventories...
Charts: Citi, TPL, Barclays
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What could go wrong?
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haha.. high yield.. wtf is high yield about 6% when the SP500 is up 50% in 2 years ;)
Had the same thought along with reading -- "if/when rates rise later this year. Rates rise? lol, sure Yellen doesnt have the nutsack, or does she?
"when the walls come tumblin down" John mellencamp
rofl... nut suck..well played..
The stage will remain set untill the last bulb on the marquis burns out.
"With rates set to rise later this year,..."
HAHAHAHAHAHAHAHAHAHAHAHAHAHA!!!!
HAHAHAHAHAHAHAHAHAHAHAHAHAHA!!!
HAHAHAHAHAHAHAHAHAHAHAHAHAHA!!!
Yep, here comes that rate increase...
Any time now...
Just wait...
It's gonna happen...
Later this year....
[We are ALL Japan now...]
True. But S & P advanced big in 2013, less in 2014, and not much at all in 2015.
this is true.. but the slack has been picked up European equities .. up 50% .. Japanese tocks up 30% in 1 year
Didn't the Russian stock market perform well when the Ruble became devalued, and as I recall, the Zimbabwe stock market posted some breathtaking gains at one time also.
But, don't let the fact of the Japan stock market is STILL under 50% from its all time high from December 29, 1989 @ 38,915, get in the way of a 30% gain in one year this year.
In short, devaluation for the "win".
It really isn't about the "high yield @ 6%", it's now about getting any of your principal back.
right. but as of right now the markets are still liquid and you can buy and sell without a problem... large chunks of bonds are hard to work out of.. huge movements in bond prices are big players operating... and rebalance.... rebalancing of pension and mutual funds are some of the biggest causes of volatility in this contemporary market.
Rates have to increase to preserve principle. Who know what all the FED has been buying.
I will believe rates going up significantly when i see it. I see more people bidding up bonds (lowering rates) when the market tanks.
Fed has triaged big banks; small banks want to get back to making loans; Congress hears hourly from savers not making anything on CDs, etc. Iran deal drives oil prices further down, and Fed has a direct interest in the value of the dollar, which is seriously compromised by low oil prices....plus, not counting the junk financing in the oil patch, offshore borrowers owe $9 trillion in US dollar-denominated debt....what could go wrong?
See Ambrose's December piece on the hidden offshore dollar debt bubble now coming due: http://davidstockmanscontracorner.com/the-9-trillion-ticking-time-bomb-o...
You'd think the FED had never crashed a market before, reading these comments. They have, and they will again.
what's a rate?
the level of desperation for yield must be breathtaking for people to consciously take the risks - unless they have no idea at all - what being the stuffie means
the suicide watch will be a nightly news release soon
Rates wll go up when Bernanke finishes transplanting his hairplugs.
He needs a row of pubic hair plugs right across his forehead.
if'n only he wud black, he be havin' a whole head o' pubic hair bruthahs...
Any real meltdown that tarnishes the casino would be welcome at this point.
Substitute "loss of containment" for the word "meltdown" if you'd like to achieve maximum ambiguity.
I doubt it.
rates will never go up...
look to japan. zero, possible negative. trillion a year monetized to 1 percent ten year. germany goes negative, unless the walls cum tumblin down, ha, then flight to merican treasuries.
long term view, a trillion every 6 months, ten year 50 basis pts...
(160 billion dod increase alone, 50 plus million stampers, s.s. adding millions, medicare bankrupt, ect ect)
debt, baby, moar debt, the game goes on longer than your patience...
Yes winners in each Economy want to stay on Top and won't help even in a Great Depression. Plus they play off of each other and ride on each others stupid ideas.
I image there are plenty of examples in World Economics, Historical Economics ala from German Economics Movement to prove that the policy was always a failure.
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- Wiemar America -
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- Watched Paul Craig Roberts on USAWatchdog.com
- US Debt can never really be fixed
- US GDP is really Negative since like 2008
- US Production Industry & Outsourced service Jobs will NEVER Come Back
- US Free Trade Policy is a Slave Trade Policy for the Cheapest Labor
- 150 Million in US on Welfare of some kind
- 100 Million over 16 years of Age not Working
- Solution must come from US Congress not Blamed on the FED so much as they have no Legislative Tool
- USA Needs some kind of Huge Investment (On Shore only) or perhaps a War just to Stabilize, plus new Economic Policies, New Banking Policies, New Banking Paradigm
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- Wiemar America -
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watched it too, very sad info. fucking hopeless.
just dod budget and foriegn aid alone could turn the ship (titanic) to a safe course, but we all know it won't happen...
plan, baby, have a plan...
new game you are clueless, your progressive war on poverty has reached $10 trillion for failure. go look at the budget pie, 22% is dod the rest is your welfare schemes for poor and rich....progressives are the problem, people like you who spout lies and inuendo.
the proggies could tax every american and corp 100% and not touch the debt your kind have wrung up, get an education before you write that drivel.
.... walls "cum" tumblin down.... you mean like janet yellen having an orgasm? ...... naw ain't never happening, and never did happen.
"permanent high plateau" comes to mind ?
all this pales compared to the empty lowes midweek mornings, deteriorating housing stock, emptying strip malls, lesser road traiffic, on and on. add to this public schools full of stupid, malnourished "melting pot" clueless kids and HY translates into societal nadir just around the corner.
awful ugly.
Tell me where your Lowes is. Mine has a 10 minute wait to get to the front every day.
With rates set to rise later this year, with crude prices likely to stay depressed...
objection your honor, that statement in incongruous.
Call me silly, but one day, just maybe, central bank hegemony will be something of the past. Collapse it may. Only then will we see rates rise. Perhaps, a lot.
the fed will buy any that the tbtf happen to hold and that go bad or else they will just pretend it didn't happen. bonus time bitchez.
Bond rates aint going anywhere. Draghi > ECB funny money will pick up the slack.
I'll eat a steaming pile of dog shit on live TV if the Fed. lifts rates in June. I'm talking the PRIME rate, not the discount window.
While that's a no bet the fed doesn't mess with the "PRIME" rate, the commercials do the prime.
jus feed dat dog lotsah lobstah and steaks foist...might ca' be tasty...
Oh no, from a teacup poodle
After 8 years of this bull$hit, $6B lost on TBT are there really still people betting with REAL money that they will raise rates in a timeframe soon enough to not go broke in the meantime? Really?
TBT baggers didn't understand the power of TPTB
However Tea Baggers do understand very clearly the power of the TPTB. It is the hopelessly imbecilic Progressive faggots who think their cup of tea is righteous. All useful idiots fall for this trick.
Dunno... But I am betting ON real money. My timing is likely not right, but once it is all said and done, I am confident to come out whole on the other side.
Could be worst April in a long while.
http://michaelekelley.com/2015/03/24/stocks-could-have-worst-april-since-1970/
How to prepare for the worst case sceanario.
http://michaelekelley.com/2014/10/16/8-things-to-do-when-recession-happens/
Good luck.
The HY sector falter?
Never /sarc
I loved this song when it came out and it's still a fave of mine! Emphasis below is mine.
Hairball
Bad Moon Rising--John Fogarty CCR
I see a bad moon rising.
I see trouble on the way.
I see earthquakes and lightnin'.
I see bad times today.
Don't go around tonight,
Well it's bound to take your life,
There's a bad moon on the rise.
I hear hurricanes a blowing.
I know the end is coming soon.
I fear rivers over flowing.
I hear the voice of rage and ruin.
Well don't go around tonight,
Well it's bound to take your life,
There's a bad moon on the rise.
Hope you got your things together.
Hope you are quite prepared to die.
Looks like we're in for nasty weather.
One eye is taken for an eye.
What's this "rates set to rise later this year" stuff?
On what planet...?
Contrary to popular opinion, No it won't...
http://www.globaldeflationnews.com/10-year-u-s-treasury-index-yieldellio...
I don't think they will raise rates, ever. But thats just like my opinion, man.