Loans Versus Bonds Relative Value: Week of October 22
Courtesy of Tyler Durden
The loan-bond convergence has hit silly levels. Last week not only did average loan and bond spreads for the indicative universe hit 2009 tights, but the spread between the two asset classes hit what is starting to seem like a silly (and 2009 record) level at 236 bps, down from the previous tight at 251 bps. The average loan (for rather highly leveraged companies) is about to breach 300 bps which absent the government soon nationalizing the entire corporate finance world seems simply ridiculous. The same could be said for the average bond spread at 654 bps. The biggest swing mover were Cenveo loans which two weeks ago widened by the amount they tightened in the past week.
More on this topic
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Senior Secured Floating Rate Bonds: The Best Investments to Own When Interest Rates Rise
(Investment U, 11/19/09)
Jeremy Siegel: 2010 Good For Stocks, Bad For Bonds
(market folly, 2/1/10)
TIM BOND: EQUITY INVESTORS ARE DANCING ON THE EDGE OF THE VOLCANO
(THE PRAGMATIC CAPITALIST, 2/10/10)
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