Bonds In Conversation : Rejoice, Revel & Reap The ShutDown
Caveat emptor : Non Americans only
The shut down has been good for the rest of the world. Equities and credit markets are holding more than steady. Bonds are outperforming, even high yields are holding up. It is an unbelievable lull we have and we don’t have to even worry about the Non Farm Payrolls tomorrow because the numbers are not coming out !
I will not give my views about the matter except that I will not be so quick to take sides. A boss is supposed to manage a company and a president is supposed to run a country. For the GOP to be staking their careers on this (popular press has it that Obama’s popularity is soaring), it feels a little kamikaze to me and there is something noble about that.
Lets be circumspect. The Taper is officially Dead with this shutdown, regardless of the extent of its economic impact. Corporates, which have not shut down, will have a chance to blame the 2nd worst quarter of earnings warnings since 2001 on this whole taper and shutdown business. All the EM crisis and ADB growth cuts on developing Asia now have escape clauses.
Almost too good to be true ? Yes. Better believe it and seize the day.
Some months back, we had Wallstreet’s brightest and smartest selling out. The head of Blackstone Group’s private equity just came out to say that we are in the midst of an epic credit bubble unlike he has ever seen and nothing lasts forever.
That is a chilling revelation that we should all take with us. Because he sees that the “largesse goes to the sellers” of companies even as easy credit benefits the buyers.
Why do I say that when Singapore has just seen a plethora of bond issues out of some interesting little companies out there ? The latest being Centurion Group coming at 5.25% for 3Y and trading at 100.50-100.70 today.
Because I just came across another interesting company placing out shares for some mining assets in some far flung part of the world. The owner had acquired the land for just under USD 10 million but the shares are going for about USD 160 million. That is Largesse for us … Oops, sorry, I mean him.
Leaving you with the prices (all unverified).
Notice that most of the smaller obscure names are quite devoid of liquidity these days.
Even newly launched issues.