Now Where Were We?

When we last reported on market conditions two years ago the Dow had closed at 12,929. Today it stands at 16,408 – a 27% improvement. Greek bonds back in April 2012 easily yielded mid-teens returns. Last week a five-year Greek bond auction was seven times oversubscribed and priced at 5%. After the first sixteen games of the 2012 season, the NY Mets win-loss record was 8-8. This year they were 8-8.

 Well, some things never change.

But could a sea change be afoot? A significant streak ended last week when, after 95 consecutive weeks of cash in-flows to loan mutual funds, S&P Capital IQ reported withdrawals of $249 million (as measured by Lipper). While all good (or bad) things eventually come to an end, it’s not clear what this development portends.

On the one hand, buy-siders are cheering that at least one source of  seemingly endless liquidity, which since 2012 had contributed to the demand/supply imbalance in the leveraged loan market, has been stoppered. The hope, of course, is that this signals, if not an end to market froth, at least a pause in the madness.

Never ones to waste a good crisis, investors got arrangers to juice spreads on several deals last week to get them over the finish line.