Tuesday, August 26, 2014
Glad That Passed
Here is a Bloomberg article on the rebound in junk bonds after a brief sell-off in late July and early August. Yields on junk bonds have dropped to 5.54%, well below their recent high of 6.01% on August 1. For a few days there I thought the market had come to its senses and was adding a healthy risk premium to junk bonds. I guess not.
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2 comments:
I am a little confused. The tone of the article initlally is that yields are falling. The yield on the junk managed by those 30 funds fell. A couple paragraphs later they mention junk spreads tightening according to a BAML study. Then they mention the Markit junk index tightening. blah blah blah ....
Then the very last section says rates rose for dozens of borrowers and leveraged loan yields increased this month. This trend seems contradictory, but they don't explain it. Am I missing something?
No, it was confusing. It lead with the rate drop, but evidence cited supported higher rates for many borrowers.
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