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HYG High Yield Bonds Replies |
rffrydr
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 Posted: Tue Apr 17, 2012 7:47 am Post subject: |
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Power of the FED
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rffrydr
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| Posted: Wed Aug 10, 2011 3:04 pm Post subject: |
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PHK was up 'til the last second. There is pulse out there.
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rffrydr
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| Posted: Fri Aug 05, 2011 11:29 pm Post subject: |
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Still our friend:
http://finance.yahoo.com/echarts?s=PHK+Interactive#symbol=phk;range=3m;compare=lqd+^gspc;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=;
Now that we have the downgrade we'll have to see what hell happens. I say bring it on. Agency "ratings" here are a contradiction. US around before Moody's and will be around after Moody's. Highlights the ugly fact that it's not just about european leadership.
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rffrydr
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| Posted: Tue Apr 05, 2011 11:06 am Post subject: |
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nodoodahs
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| Posted: Thu Mar 31, 2011 7:54 am Post subject: |
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| nodoodahs wrote: | | Some models would suggest that the current environment (steep, wide, low CPI) is more suited to U.S. high-yield than it is to U.S. equities. |
Hmm, both did quite well since Aug 2010 but SPY outperformed HYG pretty thoroughly through today.
BAA-GS10 is still pretty high, historically speaking.
BAA-AAA is fairly high, esp. relating to the last 20 years.
Heck, GS10-GS2 is still high.
All told, can't say my opinions here have changed, if you have to have a bond allocation, tilt it to lower quality and higher duration ...
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rffrydr
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| Posted: Wed Mar 30, 2011 9:01 pm Post subject: |
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Hand in hand...hand in nose:
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rffrydr
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| Posted: Sat Feb 19, 2011 5:39 pm Post subject: |
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Yup....after three years chanting "all about bonds, baby" (and giving up any participation here for the last half of this one) I'd have to at last concur: toppy.
Please respect FT.com's ts&cs and copyright policy which allow you to: share links; copy content for personal use; & redistribute limited extracts. Email ftsales.support@ft.com to buy additional rights or use this link to reference the article - http://www.ft.com/cms/s/3/78465eb2-3528-11e0-9810-00144feabdc0.html#ixzz1ERvJq1y0
High-yield bonds
Published: February 10 2011 15:15 | Last updated: February 10 2011 16:26
| Quote: | With most western economies tentatively in recovery mode, a new bubble in the financial system is probably the last thing on leaders’ minds. But two data points this week may make them pause. First, rating agency Moody’s reported that during January there was not one default in all the global companies it tracks, the first clean slate since June 2007. Second, yields on high-yield debt fell below 7 per cent for the first time in six years according to BofA Merrill Lynch.
EDITOR’S CHOICE
New Jersey rating is cut by Standard & Poor’s - Feb-10Lex: US muni smackdown - Feb-02Record amounts withdrawn from US muni funds - Jan-21In depth: US states of emergency - Jan-21Lex: New Jersey - Jan-19Lex: US municipal bonds - Jan-04On the face of it these both appear to be good news. A low default rate should persuade lenders to dish out more loans to small businesses, while low funding costs for these companies should encourage more of them to ask for capital to expand.
But the wider problem is that part of the high-yield market’s strength stems from financial investors’ desire to find somewhere to park their money while real interest rates are negative. With defaults at a halt, high-yield bonds can be seductive. Indeed, global issuance of subinvestment grade debt – primarily in the US – has grown almost two-thirds this year compared with the same period last year, outpacing growth in the investment grade stuff. The seven month streak of $20bn or more raised each month makes it the strongest junk-bond run in at least three decades says Thomson Reuters.
Whether or not the surge in US high-yield bond issuance is indeed the beginning of a bubble depends on whether the return on investment that the borrowers generate can outlast the US economic stimulus measures that have helped the growth along. These measures will probably be retracted well before the maturity of most new junk bonds. With the impact of the stimulus still uncertain, investors should not confuse a high-yield bond for a high-yield cash account.
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I was confident that stocks would overcome the first big selloff here (we did have a mini-crash in November as the tax policy trade pulled the plug on munis that went almost unnoticed by stocks); but no more. I still don't see 7% as dramatically low for companies that made it through the trough (though the very laxity of covenants symptomatic of the great yield bull was part of that reason (compound irony)) in a world where the market now sees corporates over nation-states. 8% or so is an historical norm for good times--but these are better than good, they're tough times. Also don't see the Fed pulling the plug on QEII. That was carefully crafted originally so they would have flexibility to do so--but the market had a tizzy-fit. Fed had to commit. It won't go back. Remember too that GSEs are on the table this year.
World inflation, as FED interviews would indicate, are not an issue.
That leaves some kind of doodling in the money markets or bank reserves. There's much cover under Basel and Stress Test II. Biggest risk now is Govt. freeze-up spiking spreads....but that will be another "buy." The dividends are NOT flowing out of company cash hoards and no-one trusts "buy-backs" anymore. That'll keep this bid along with jittery developing country displaced FDI if markets keep as they are. Remember the land of the rising sun 
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rffrydr
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| Posted: Mon Jan 10, 2011 8:08 am Post subject: |
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Update in spreads over treasuries:
"Speculative-grade companies, those rated below Baa3 by Moody’s Investors Service and BBB- by Standard & Poor’s, can sell bonds at yield spreads averaging 523 basis points, down from 603 a year ago and 1,642 two years ago, based on Bank of America Merrill Lynch indexes."
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rffrydr
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| Posted: Sun Dec 12, 2010 11:18 am Post subject: |
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There's always a "V" depression. Alphaville can see only the "vitiosus" side--but those same conditions create the "virtuous" side. Some is just a matter of accounting; some a matter of nomenclature. They take great exception to the fact that the High Yield Index is now full of "CCC" debt (as if Ratings mattered here and now) and are terrified that this all-time high issuance has taken default levels below munis. What other "proceeds" do they expect from free money???
Has anyone given any credit to the fact that the company is even here? That's a defacto investment grade. Ford, you're the posterboy.
http://ftalphaville.ft.com/blog/2010/12/10/434051/another-milestone-for-junk-debt/
http://ftalphaville.ft.com/blog/2010/04/06/195496/investors-really-♥-junk-we-mean-really/
http://ftalphaville.ft.com/blog/2010/12/10/434051/another-milestone-for-junk-debt/
http://ftalphaville.ft.com/blog/2010/08/17/317016/and-the-junk-bond-rally-sailed-on/
Trash before treasure--one of the great calls here on the MT board. I'm now out of this "space" in lieu of options writing but expect the yield to be there for quite some time. Still looking for PHK entry on good selldown. Treasuries bumped will now make for volatility just like VIX trading. At some point this next year (!) we'll see three jobs numbers in row 200000+ (not that we'll get down to 7% unemployment anytime this year or next) and there'll be a generalized selloff in bonds. A blastoff above 1220 SP (with all banks back to dividend that entails) and probably the same (already hints of that) but spreads to treasuries should narrow for a long time.
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rffrydr
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rffrydr
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| Posted: Fri Sep 10, 2010 11:35 pm Post subject: |
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High-yield bonds
Published: September 9 2010 09:57 | Last updated: September 9 2010 17:06
| Quote: | While almost everyone is banging on about uncertainty, more money than ever is being showered on the most uncertain of borrowers. Global bond issuance by companies rated BBB and below totals $177bn year-to-date, up 96 per cent over a year, according to Thomson Reuters. At this rate, junk-rated issuers will blow through the all-time annual record – $185bn, in 2006 – with a whole quarter to spare.
An excess of liquidity, combined with ultra-low money-market rates, is driving yield-hungry investors towards corporates. That triggers a virtuous circle of refinancings and better credit ratings. There have been more upgrades than downgrades of US corporate debt in three of the past four quarters – better than in the salad days of 2005-2007. High-yield is the real sweet spot, with 40 per cent more ups than downs year-to-date. |
Hit the sell limit on some of what is left today. That the market would embrace "triple-B" should be of no surprise to anyone dodging the ratings agencies cannon fodder this last two years. The best measure of a company was its survival. Not even pension funds really use these guys any more.
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rffrydr
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nodoodahs
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| Posted: Tue Aug 10, 2010 1:32 pm Post subject: |
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Some models would suggest that the current environment (steep, wide, low CPI) is more suited to U.S. high-yield than it is to U.S. equities.
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rffrydr
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| Posted: Tue Aug 10, 2010 8:04 am Post subject: |
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Yield, always big, is taking the mantle from commodities as measured in ETF flows:
http://ftalphaville.ft.com/blog/2010/08/09/309696/whos-capturing-yield/
PS: I just saw a headline relating to the Helios Funds. I NEVER see headlines relating to these guys.
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rffrydr
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| Posted: Fri Jul 30, 2010 9:13 am Post subject: |
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Well the warning cry is out again, this commentary. And no doubt many dangers lurk in leveraged closed-end funds...but so too, opportunity. Remember the trend is your friend an '08 default rates were projected some 5X higher than observed thus far. Meanwhile the pain of leverage was blood in the streets. For those able to buy-in at this time it's been nothing but ambrosia. Bond vigilantes have been screaming higher rate all the while we set new lows. Leveraged yield in once-in-a-lifetime "lower for longer" money, all the while "productivity gains" piling the cash higher....that works.
Some of the hefty "premiums to NAV" like Gross' fund, PHK, are more an artifact of "mark-to-market" obfuscation than the fund itself. His fund is full of illiquid GMAC retail "smart bonds" which are marked next to nothing and, at this point, fully federally guaranteed. Same with much of his mortgage CDOs whose "price" will only be marked in runoff. That particular premium has carried through the last four years.
But I don't think the big move by Retail is to CEFs. They're in treasuries, AAA corporates, GE and down the scale.... The big risk there is the structures: mutual funds, ETFs (and CEFs) that don't have an "yield-to- maturity" like a common bond. Rollover is capital risk. This will be a big surprise at some point.
I'm out of hiYield (other than a reduced TruPs play) at this time. But have no qualms about getting more long on the big ugly Fed Hike that takes us to 2002 lows next year. Using call-writes, straddles for my yield now. Still a believer in "this space."
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