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’Google adventures out along the yield curve [updated]
By John McDermott and Cardiff Garcia
Here’s a corporate bond mystery for you.
Google has $36.7bn cash on hand as of the end of March, according to its Q1 SEC filing. $16.9bn of this cash is held overseas.
Europe’s corroding core, a credit story
Here’s one for the corporate vs sovereign credit theme.
Barclays Capital points out on Tuesday that CDS on a number of European corporate names is now trading close to — or even better than — their domiciled countries.
A not-so-CLOooo recovery
Structured finance world, rejoice. Banks too.
Early this week Standard & Poor’s announced a mass (and we mean mass) round of positive news for Collateralised Loan Obligations (CLOs) — those sliced and diced bundles of corporate loans.
The neo-medieval trade
Markit pointed out something interesting on Monday: there’s a record spread between their iTraxx Europe and SovX Western Europe CDS indices.
Chart via Bloomberg, click to enlarge:
SovX WE — which is filled with such wholesome sovereign goodness as Portugal and Ireland — has obviously had a few down days recently,
Desperately seeking income
In common with many investors, pension funds have a problem, which can be summed up in the following two graphics from UBS:
For a variety of reasons (two bear markets in a decade, the boom in liability driven investing and so on) pension funds and other institutional investors have slashed their weightings of equities and bulked up in bonds in the past quarter of a century.
Grεεk cοrpοrαtε cοntαgiοn
Is Greek CDS getting out of hand?
On Wednesday, the cost of insuring debt of the Hellenic Republic rose to a record 353.5bp, according to CMA DataVision. Which means the country’s CDS chart looks something like this:
Not your average crisis in corporate credit
From Goldman Sachs.
Devil’s in the details for defaults
An interesting report is out from Standard & Poor’s on Friday, entitled “The Devil is in the Details: Understanding the Variation in Corporate Default Rates and Rating Transitions.” Now doesn’t that sound exciting?
(Ahem)
The thrust of the piece is that while it’s obvious global corporate default rates increase overall in times of crisis,
Liquidising the credit rally
The recent stabilisation in the Institute for Supply Management Index (ISM) has been hailed by some as justification for a rally in corporate credit.
Indeed, there’s historical precedence for that. Over the past 40 years,
Moody March
While March saw equity markets rallying – the experience of the corporate credit sector was somewhat different.
RBC Capital has a summary of Moody’s March default report, released late Monday.
Moody’s released its default report for March which saw a pick-up in the default rate from 5.2% in February to 7% in March.
The invoicing crunch
There’s a hidden credit crunch going, according to UBS economists Paul Donovan and Larry Hatheway — a crunch relatively unreported because it is occurring within the more opaque realms of inter-company credit.
2006-2007, a bad vintage for leveraged loans
As with wine, the structure of a loan will depend on the year it was created. Some loans have more generous terms for borrowers, for example, reflecting the higher appetite for risk that permeated the financial world at the time.
Corporate credit, the pachydermic herd in the room
We’ve seen a run in them in recent weeks: the potential for a cascade of corporate defaults to impact sectors like insurance and banking.
UBS picked up on the idea on Friday, expounding the danger of a sharp increase in company default rates in its latest European Credit Tracker: