"Precarious" is not the term a CEO ever wants to use during an earnings announcement as UBS's Grubel did today. Notable was their dwindling prime brokerage assets. I'm a firm believer, and witness, that clients yanking their prime brokerage money can be the death knell to a firm....witness Bear, Lehman and other close calls.
At the risk of beating a dead horse, demand for credit spread product remains very strong. Using some simple math, you'll note that, on average, there are $75B in bonds maturing monthly (including coupon payments). This month alone, there has been only $21B in issuance. In addition, much of this issuance has been in FDIC guaranteed debt which usually does not fit the target of a credit investor. Please also bear in mind that Goldman noted they have $164B in cash and 'liquid' securities to invest in distressed assets.
It's no wonder then that HCA is bringing a deal in the high yield market. The $1B issue will be the largest in 6 months....and at the tightest market spreads in 6 months as well.
The Vix remains tantalizingly low....approaching the September pre Lehman blow-up levels. Historically, that has bode well for credit spreads.
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