High Yield Bond Market Time Bomb
How bad is it in the High Yield Bond Market these days? The prices don't reflect the shadows that the artistically trimed hedges cast here at the Overlook...
Three deals worth almost $1.5 billion in junk bonds from Cheniere Energy Inc., Diamon Inc. and Hughes Network Systems were all postponed last week.
GM debt is currently just one grade above junk and will be downgraded to junk by this summer. Ford will be downgraded sometime next year.
Interesting codicil: There are rules which mandate that pension funds and insurance companies can only hold institutional grade debt.
As a result, when GM is downgraded, the market could be awash in GM debt as the institutions are required to divest, if they have not already.
GM accounts for $200 Billion of the $900 Billion total in the junk bond category. Can you say poof? Thats good, I knew you could.
As the Banarama lyrics say, "its a cruel, cruel summer."
Three deals worth almost $1.5 billion in junk bonds from Cheniere Energy Inc., Diamon Inc. and Hughes Network Systems were all postponed last week.
GM debt is currently just one grade above junk and will be downgraded to junk by this summer. Ford will be downgraded sometime next year.
Interesting codicil: There are rules which mandate that pension funds and insurance companies can only hold institutional grade debt.
As a result, when GM is downgraded, the market could be awash in GM debt as the institutions are required to divest, if they have not already.
GM accounts for $200 Billion of the $900 Billion total in the junk bond category. Can you say poof? Thats good, I knew you could.
As the Banarama lyrics say, "its a cruel, cruel summer."
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