Loans Versus Bonds Relative Value: Week of August 20

In what can only be attributed to a rogue computer blowing a vacuum tube, virtually all the names in the credit universe were wider over the past week, despite an equity market ripping, or, more specifically, AIG, FNM and FRE ripping and everyone piggybacking for the ride in a few bankrupt companies. In the meantime, loans were wider on average 5 bps while bonds saw their firsts widening in over 2 months at 58 bps.

Biggest movers were, not surprisingly, the high beta names: Select Medical Bonds at almost 300 bps wider, and both Neiman Marcus and Sungard wider by 200 bps. The only name continuing its move wider was West Corp, due to the buyside's recent surprising predilection for tech and telecom names (China will only buy so many trading turrets for the 1 billion plus stock market speculators).