Credit investors are buoyed by the continued equity raises (from JPM, AXP, and MS) and spreads are reacting positively. In addition, all-in credit yields are double the treasury/risk-free rate which makes credit very attractive (from a historic perspective).
Today's data point to illustrate the strong technicals - $384B in bonds leaving the index (maturity or downgrade to high yield) versus only $326B in new issuance.
In the wake of GM's filing on June 1st, it's helpful to note that there were only 7 defaults during May (versus the monthly average of 15). Including GM, that brings the YTD total amount of debt defaults to $124B (versus the previous high of $64B for all of 2001).
As you've learned, I oft cite the market's negative basis as a sign of it's health and depth of demand. Bloomberg recently noted that it's also become a rejuvenated source of profit for 'fast money'.
In the new issue market today, I'm hearing of CVX, ESRX, and PRU. Of note, PRU recently declined TARP money. In the hurry to pay back or ignore TARP money, the Fed has decided to issue criteria for paying it back.
Apparently, the UK will not follow the lead of it's former penal colony, Australia, in rescinding the short-selling ban....it remains on indefinitely.
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