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Category Archives: bonds and loans
New ABX Mortgage Index Still Looks Ugly
The much-followed ABX index of subprime mortgage bonds rolled over yesterday.
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Posted in bonds and loans, housing
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Low Rates: Dead or Alive?
It’s the duel of the newsweekly pundits! Is God dead, or is God alive? (And
by God, of course, I mean the era of low interest rates.)
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Posted in bonds and loans
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China Moves Out of Treasuries to Support the Mortgage Market
The Bush administration is very serious about it getting China to support the market in mortgage-backed securities.
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Posted in bonds and loans
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Staying Sanguine About the Bear Stearns Losses
DealBook
today sets up a mini cage match between me and Janet Tavakoli:
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Posted in bonds and loans, hedge funds
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Why Highly-Rated CDO Tranches are a Bad Bet
Lets’s say you are given a choice between two AAA-rated bonds. Both have the
same probability of default, which is very low. But Bond X defaults pretty randomly,
while Bond Y defaults only during times of economic catastrophe. Which would
you prefer?
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Posted in bonds and loans
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Do Portfolio Managers Model the Illiquidity Discount?
Neil Shah of Reuters brings up the perennial
debate about "mark to model" behavior among fund managers.
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Posted in bonds and loans
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When Issuers, Not Investors, Drive Rates Higher
Justin Lahart says that if you buy a high-return investment,
you ought
to know it’s likely to be high-risk as well.
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Posted in bonds and loans
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Why Enormous Personal Debt Means a More Vibrant Economy
Chris Dillow finds
a silver lining to the ever-increasing amounts of leverage bidding up asset
prices around the world.
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Posted in bonds and loans, economics, personal finance
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Real Estate Leverage Datapoint of the Day
What
on earth are the lenders
to buyers of office buildings thinking?
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Posted in bonds and loans, housing
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When Papers Promise But Don’t Deliver, CDO Edition
I continue my search
for someone who can shed light on exactly what happens to the alphabet soup
of MBS and CDO and CDS when subprime default rates rise.
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Posted in bonds and loans
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Trying To Make Sense of the Mortgage-Backed Market
Andrew
Leonard says that I’m "a voice of calm and restraint when the rest
of the econo-blogosphere is racing to the windows to see if the sky has started
to rain suicidal investment bankers". Always happy to help. So let me revisit
the issue of US mortgage-backed bonds, and try to put yesterday’s panic into
a bit of context.
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Posted in bonds and loans, housing
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How To Get To AAA
In the CDO market, I’m not convinced that overcollateralization always works particularly well.
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Posted in bonds and loans
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Why the S&P-Triggered Subprime Selloff Makes No Sense
S&P’s announcement today tells us nothing that we haven’t known for months about the subprime market. So count me utterly baffled by the market reaction.
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Posted in bonds and loans, housing
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Blogging Risks in the CDO Market
After having my coffee
with Armond Budish this morning, I found myself in the neighborhood of my
old offices at Roubini Global Economics,
so I popped in to say hi. Nouriel
was there, extremely alert and rested for someone who’d made two trips to Singapore
in the space of one week, and so was Brad
Setser, who, being Brad, wanted to talk about the potential systemic consequences
of a rebalancing of Arab states’ foreign exchange reserves.
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Posted in bonds and loans
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Crazy Leverage in the Hilton Deal
Russ Winter notes that Blackstone’s acquisition of Hilton
hotels doesn’t make
a lot of sense from a cashflow perspective.
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Posted in bonds and loans, private equity
1 Comment
Ralph Cioffi’s Failed Liquidity Arbitrage
Veryan Allen has a neat riposte to anybody who claims that
the meltdown at Bear Stearns’ credit funds shows how dangerous hedge funds can
be: the Bear Stearns funds weren’t
hedge funds!
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Posted in bonds and loans, hedge funds
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When Mortgage Derivatives Get Included in CDOs
Antony Currie of Breaking Views, who’s been following the
mortgage mess very closely, emails me with some color about the degree to which
derivatives – credit default swaps, or CDSs – are a part of the
CDOs that everybody seems to be so worried about these days.
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Posted in bonds and loans, derivatives, housing
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More on CDOs and Derivatives
There are a lot of CDOs which have a lot of exposure to the CDS market. There are also a lot of CDOs which have a lot of exposure to the subprime market. I just don’t think they’re the same CDOs.
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Posted in bonds and loans, derivatives
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CDOs: Factchecking Krugman
Paul Krugman has a reasonably good overview
of the mess in the CDO market today (free version here).
But he goes much too far when he tries to impress upon us how big the problem
is.
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Posted in bonds and loans
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Subprime Mess: It’s Not Derivatives’ Fault
Let’s not start blaming illiquid derivatives for Bear Stearns’ problems. Right now, illiquid derivatives are the least of anybody’s problems.
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Posted in bonds and loans, derivatives, housing
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Bloomberg Plays Gotcha with S&P
Bloomberg’s Mark Pittman isn’t hedging his bets in a story
headlined "S&P,
Moody’s Mask $200 Billion of Subprime Bond Risk":
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Posted in bonds and loans
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Why Margin Calls Need Not Destroy the CDO Market
The
Epicurean Dealmaker explains why I’m a bit too sanguine about the prospects
for the CDO market: it all comes down to margin calls.
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Posted in bonds and loans
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Unpacking the Risks in the CDO Market
There is cause for concern, to be sure. But there isn’t cause for panic.
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Posted in bonds and loans
2 Comments
CDO Scaremongering, Ebola Edition
Tim Price is some
kind of genius.
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Posted in bonds and loans
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Bear Stearns Funds: Is Everything OK Now?
After throwing the entire financial media (if not the actual markets) into a week-long tizzy, Bear Stearns seems to have found a way to stabilize things without committing too much of its own money and without subjecting its funds’ prime brokers to any losses.
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Posted in banking, bonds and loans, hedge funds
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