The onset of renewed market volatility last week reminded credit participants that exogenous events do impact prices and new issuance, though to differing degrees. Broadly syndicated loan and high-yield bond markets both saw price declines in secondary trading. But new junk issuance slowed to a crawl after the Brexit vote, while loan activity continued uninterrupted. This…
“Thank God for the Electoral College.” Thus the co-head of a major credit trading desk put a brave face on the US political outlook after last week’s stunning Brexit vote. And while the wisdom of our Founding Fathers may shield us from a similar upheaval in the direct popular vote for President, there’s no guarantee…
By the time you read this, the UK will be voting on its long-awaited referendum on whether or not to leave the EU. Polls show the contest too close to call. Whether “Remain” or “Leave” prevails, the Brexit outcome will undoubtedly impact international politics and the global economy for years to come. Despite turmoil in the…
In what was described as a series of events in which “several things went wrong,” a 230-foot long replica of Noah’s Ark plowed into a Norwegian patrol boat last week. The collision cut a gaping hole in the side of the bible boat, leaving the owner distraught. “It’s an awful dream, to have an accident…
Last week’s disappointing employment report was another brushback pitch to the Fed as it hopes to hike rates sometime this summer. While some economists worried that diminished job creation could foretell a slowing in US GDP, others pointed to real wage growth, better consuming spending, and improved housing starts. We have noted before the Fed’s…
It was the medical equivalent of winning the lottery. Patty Ris, an 87 year old resident of a Cincinnati nursing home, began to choke on her hamburger. A man seated next to the woman, seeing her distress, smoothly performed the Heimlich as if he had invented it. The piece of meat popped right out. Turns…
A major consequence of regulatory reform since the credit crisis has been the reduction of future demand for leveraged loans. As one example, risk retention rules have dramatically impacted the formation of new CLOs. These securitized vehicles currently comprise roughly 60% of the broader US loan market. Banks, of course, have seen their capacity curtailed…
The question of where we are in the business cycle may ultimately be answered only in hindsight. Similarly what triggers the next cycle will likely different than what set off previous downturns. Subprime mortgages, tech, or sovereign defaults will probably not be culprits, though fallen energy credits could certainly qualify. Given the mature recovery, credit…
Timing in private credit investing is an important part of decision making for asset managers. Having a view on where we are in the business cycle and how close we are to the next downturn helps frame decisions on specific credits, particularly those in more cyclical industries. In mezzanine investing, timing is essential. 2006 sub…
Just when we thought we were out of the economic woods with a strong report on April jobless claims (lowest since 1973), there came the 1Q GDP report showing anemic growth of 0.5%. That was enough to send equities down over 1% for the week. This good news-bad news pattern is discouragingly familiar to market…