The credit market hasn’t cracked yet

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It is undergoing a painful repricing, but not veering into dysfunction. Yet two risks remain

Save time by listening to our audio articles as you multitaskThe worst instances of this occur when the credit market comes unstuck, as it did in the financial crisis of 2007-09. That adds an ominous ring to the unusually sharp losses credit investors have endured recently. Based on total returns, American investment-grade bonds are down by 14% since September. European ones have dropped by around 10%, their worst peak-to-trough plunge.

A tsunami of corporate defaults remains unlikely. Few of the riskiest borrowers have to repay their debt in the next 18 months. Of America’s $1.5trn-worth of high-yield bonds, just 4.5% falls due before 2024; the figure is 6.4% in the euro zone. Most issuers need only worry about earning enough to meet their interest payments rather than finding new lenders to roll over their debt.

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? Why would investors put their money on the side lines in cash — losing 10% per annum — at least put it in defensive stocks or are they tainted by WindfallTax

If it didn't happen during a complete shut down... fear of it now is simply stupid.

Just 'political defaults' in Australia!

ExplainThisBob

France Dernières Nouvelles, France Actualités

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La source: TIME - 🏆 93. / 53 Lire la suite »