Wednesday, July 18, 2007

A Look At High Yield Spreads / Bespoke

Nice chart from Bespoke .(see blogroll) that shows how perfect the credit conditions were. From now on the credit market is facing serious headwinds.....And this move has happened without a major default dampening the appetite.....Not difficult to imagine how this chart would look like when we have a big default....At this point we could see the stress test for the credit default swap market.... The test in subprime is now underway and it is not a pretty picture....

Netter Chart von Bespoke (Blogroll) der sehr schön zeigt wie nahezu perfekt die bisherigen Kreditbedingungen gewesen sind. Von nun an dürfte es etwas ruppiger zugehen....... Das gilt besonders da der jetzige Anstieg ohne eine größere Insolvenz von statten gegangen ist...Nicht schwer sich vorzustellen wie der Chart aussehen würde wenn wir den ersten größeren Kreditausfall haben werden..... Zu diesem Zeitpunkt sollten wir dann auch den ersten richtigen Streßtest im Credit Default Swap Markt sehen....Der aktuelle "Subprime" Test sieht nicht sehr verheißungsvoll aus.....

While the move looks small in the big picture, the spread between high yield corporate bonds and US treasuries has risen by 27% since bottoming on June 1st. As of yesterday's close, junk bonds were yielding an average of 307 basis points more than treasuries.

And here the real times effects hitting (as one of many examples) Daimler-Chrysler-Ceberus..... I think the CEO Zetsche is sweating and praying right now..... :-)

Hier stellvertretent die Auswirkungen am Beispiel von Daimler-Chrysler-Ceberus......Kann mir gut vorstellen das Zetsche momentan feuchte Hände hat und einige Stoßgebete gen Himmel schickt.... :-)

Thanks to Calculated Risk

Wall Street banks that are arranging financing for Cerberus Capital Management LP's acquisition of the Chrysler Group are looking to sweeten the terms on loans

......bankers marketed a $10 billion loan for Chrysler's auto business at 3.75 percentage points above the London Interbank Offered Rate, compared to the 3.25 percentage points discussed when the road show kicked off about three weeks ago, Standard & Poor's said.

And another $2 billion in financing for the auto company is now being marketed at seven percentage points above the London interbank offered rate, compared to the original six percentage points. The banks are also offering to sell those loans at less than 100 cents on the dollar in a bid to further entice investors to the deal....

Pricing for $8 billion in loans for Chrysler Financial is also expected to change...J.P. Morgan Chase & Co., Bear Stearns Cos., Goldman Sachs Group Inc., Citigroup Inc. and Morgan Stanley have committed to raising money for the deal that will require Cerberus to raise about $62 billion in debt.

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