Andreas Stover

Number of Distressed Bonds Rising at Rapid Rate

These distressed bonds and default rate numbers are likely to get worse if the standards on bank C&I loans tighten as this will push the worst of the ponzi borrowers over the edge.

The July data from the Senior Loan Officer Opinion Survey on Bank Lending practices indicates that we might be in the middle of a wave of such tightening.

This doesn't necessarily mean that junk bonds are not undervalued right now, just that their values cannot be properly estimated using current default rates.

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