Category Archives: bonds and loans

When Cheap Bonds Look Attractive

Posted on August 15, 2007 by Felix

Henny Sender gets a
little bit ahead of herself in the WSJ today, although she does pick up
on something important: that as the price of debt falls, it’s starting to become
more attractive, on a relative-value basis, than equity.
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The Travails of Johnson & Johnson

Posted on August 14, 2007 by Felix

If there was one corner of the debt market immune from present credit woes, one would imagine it to be the market in unsecured, “natural” AAA-rated securities.
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Posted in bonds and loans | 2 Comments

Conflicts of Interest at the Ratings Agencies

Posted on August 13, 2007 by Felix

The problems come when a ratings agency, after having worked closely with an issuer for a long time, gets lazy about asking tough questions.
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When Volatility Strikes

Posted on August 10, 2007 by Felix

We’re not on the brink of Armageddon.
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Profiting From Illiquidity

Posted on August 10, 2007 by Felix

You need liquidity to profit from a liquidity event.
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The Commercial Paper Market Gets Perilous

Posted on August 10, 2007 by Felix

The entire CP edificie – which is mind-bogglingly enormous – is predicated on CP issuers being able to roll over their debts
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Is This a Liquidity Crisis or an Insolvency Crisis?

Posted on August 9, 2007 by Felix

Telling the difference is always more of an art than a science. And from my point of view, a lot of what Roubini considers to be insolvency is reallly “just” a liquidity problem.
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The Credit Crunch Reaches the Money Market

Posted on August 9, 2007 by Felix

Investors in obscure asset-backed instruments knew, or should have known, that they were taking liquidity risk. But the interbank market and money-market funds are designed to be as liquid as possible.
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BNP Paribas Funds: A Non-Story With Big Consequences

Posted on August 9, 2007 by Felix

Why all the fuss about these BNP
Paribas funds?
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Credit Market Datapoint of the Day

Posted on August 8, 2007 by Felix

Serena Ng says that Bear Stearns paid
"a heavy price" when it issued $2.25 billion of five-year bonds
at 245bp over Treasuries on Monday.
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The ABX Indices: Making the Bad Seem Worse

Posted on August 8, 2007 by Felix

The ABX.HE indices are a pretty weak indication of what mortgage-backed
bonds are actually worth.
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The Jumbo Mortgage Window Slams Shut

Posted on August 7, 2007 by Felix

Are we in the middle of a fully-blown credit crunch, or is this merely an unpleasant and discontinuous repricing? The answer to that question lies in whether credit is available at any price.
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Subprime in Germany

Posted on August 3, 2007 by Felix

Who or what is an IKB? I know there are lots of obscure European banks, but
IKB is obscure even by German standards. And somehow – really, no one
seems to have the foggiest notion how – IKB’s Rheinland Funding vehicle
seems to have contrived to amass an eye-popping €17 billion ($23 billion)
in US
subprime exposure.
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How Securitization Arbitrages Bond-Market Inefficiencies

Posted on August 1, 2007 by Felix

The bond market, dominated as it is by risk-averse bond investors, is simply not a perfectly efficient market.
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Don’t Trust the CDS Market to Gauge Brokers’ Creditworthiness

Posted on July 31, 2007 by Felix

For reasons I don’t fully understand, credit default swaps seem to have a tendency
to gap out much further than spreads on the underlying bonds.
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The Credit Duel, Part 2

Posted on July 30, 2007 by Felix

The duel of the newsweekly pundits continues!
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Unlevered High-Risk Debt vs Levered Low-Risk Debt

Posted on July 30, 2007 by Felix

Alea has found
a tantalizing tidbit from Anthony Morris of UBS, as reported
by Reuters.
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There’s No Morality In Bond Yields

Posted on July 30, 2007 by Felix

Tim Reason says that borrowing costs “ought to reflect” credit risk. My response is that, most of the time they do. But that if and when they don’t, no bolts of lightning will necessarily descend from the Market Gods.
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Bear Stearns Funds: Still More Questions Than Answers

Posted on July 27, 2007 by Felix

Back on Monday, I had a whole set of unanswered
questions about the collapsed Bear Stearns hedge funds. Today, we got news
– but no answers to those questions. In fact, there are now more questions
than ever.
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In Defense of Securitization

Posted on July 27, 2007 by Felix

Tim Reason says
that Jonathan Weil is right
and I’m wrong
when it comes to securitization:
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The LBO Bubble Bursts: Not Necessarily a Bad Thing

Posted on July 27, 2007 by Felix

Steve Schwarzman might
not be a happy bunny today, but I don’t think Warren Buffett
is losing any sleep.
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Posted in bonds and loans, stocks | 1 Comment

Banks Stuck With Unwanted Chrysler Debt

Posted on July 25, 2007 by Felix

Suddenly, underwriting billions of dollars
in junk-rated debt looks less like a profit center and much more like a very
bad idea.
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Emerging Markets: Yields and Spreads

Posted on July 24, 2007 by Felix

Alphaville’s Gwen Robinson has gotten
her hands on some research from CLSA’s Christopher Wood,
who foresees emerging-market debt yields even lower than the yields on US Treasury
bonds.
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Why It’s OK to Trust Ratings Agencies

Posted on July 24, 2007 by Felix

Over the past decades, it’s very hard to find areas where the ratings agencies have been spectacularly wrong.
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Transocean’s Unnecessary $15 Billion in Debt

Posted on July 23, 2007 by Felix

The era of leveraged deals is far from over, it would seem.
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