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  • Life After Citi: Shorting High Yield Bonds  [View article]
    The factor that is driving the price of the low grade bond sector is the deleveraging of the hedgies. They had a pretty good trade going of borow short and cheap from the banks and lend longer and higher to the companies / buy bank loans. That is unwinding with a real crash as the hedge funds have to sell. It is driving the yields through the roof. As noted by someone else, the priced in default rates are unlikely to be hit in the real world future. I would rather look for a bottom pretty soon and look to get long in this sector. Why buy shares when you can lock in near 20% yields on the debt?
    Nov 26 05:43 am |Rating: 0 0
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