giant scam

Yahoo bond spreads said 2yr A-rated bonds are yielding 13% so I go to my broker and what do I find? In that ratings range, only financial companies have bond offering in that yield range. ALL non-financial companies have 2-4% YTM (aproximately 1/2 to 1/3 the yield) If you’re not a financial company it’s business as usual. The market will lap up your bonds without a hitch. The whiners can’t move their bonds so they nominate King Whiner to go to Wall Street with a shock & awe depression story.

if that’s the average yield for a group of stocks, then that’s what it is, but I agree some will make headlines out of it. In any one day, you will find yields of 50% or more, so one can make such headlines everyday.

“If you’re not a financial company it’s business as usual. The market will lap up your bonds without a hitch.” You can add the Big 3, car retailers, and homebuilders to that list. I can’t imagine GM or a company like Lennar trading at spreads tighter that the financials.

Hey Virgin, are you still fishing around the muni market? I hear there’s some nice yield to be had in VRDB’s. SIFMA hit 7.96% last week!

VRBD? are those resets? If so, Yes, I still own some resets but the pool available at my broker has gone down to under 200 (it used to be over 900). It’s very difficult to find the ones that are truly market rate, not tied to some muni index (but even those are up to 5%). I came up with a strategy that’s worked well all summer… I buy the ones that are being called. The month or so leading up them being called they usually have a higher yield, and since they are being taken off my hands, I don’t worry so much about liquidity or credit rating. Still, I’m cautious about putting too much money there. And why bother? my regular old muni-money market fund is yielding over 5% tax free!

Yeah, VRDB’s are reset either daily or weekly. They are different from auction rate bonds in that there is a bank that provides a liquidity backstop. The liquidity backstop allows investors to put the bonds to the bank at each reset date. The market has been going crazy the last couple of days and some highly rated issuers, with highly rated banks providing both credit and liquidity support, have seen their rates resetting close to double digits. The turmoil is due to fear of bank failures as wells as investor withdrawals from money market funds.