Questioning the Value of Junk
BBB rated are two steps away from junk status. The next stop is BBB-, then Junk.
BBB rated bonds yield just 74 basis points more than AAA rated bonds
BB- rated bonds, the third step into junk, yield 3.93% a measly 69 basis points more.
Bad Credit? Who Cares?
The Financial Times reports Yield-Crazed Investors Pile Into US Subprime Car Loans
Deals have been “going gangbusters” in subprime auto asset-backed securities (ABS), said Jennifer Thomas, an analyst at Loomis Sayles, a Boston-based firm managing $286bn of assets. At $29bn so far this year, issuance of subprime auto ABS is on track to surpass 2018’s record haul of $32bn, according to data from Finsight, despite softer sales of new cars and trucks this year.
These subprime card offerings are five or six times over subscribed.
Fed Watching Over You
Everyone seems to be assuming the Fed will not let another bond disaster as we saw in the Great Recession ever happen again.
Mike "Mish" Shedlock