Diane Ritter

Corporate Bonds: When Safe Asset Classes Become Risky

It is pretty dishonest to say LQD "is not a bank". The only reason it is considered investment grade is that S&P and Moody's ratings are so irresponsible as to be criminal negligence. It is stuffed full of bonds from troubled banks. It hasn't dropped like a rock because "increasing fears that companies will not be able to sustain interest payments on bonds". It has dropped like a rock because people have JUSTIFIABLE concerns about the accuracy of the balance sheets of many of these banks. At this point I have stopped believing anything they say anymore on their balance sheets. It is all lies. They aren't marking to anything. They are letting the bad news out a little bit at a time in the hopes that somehow they won't be caught out in their lies. No one should invest in these bonds until these banks start honestly reporting on the value of their assets. Don't hold your breath though, for a lot of them this isn't an option. If they did, they would be admitting they were bankrupt.