Naked Capitalism from a about the unintended consequences of Treasury’s Whack-a-Mole efforts:
US mortgage rates have soared this week in an unexpected reaction to the latest Treasury financial rescue plan which has prompted investors to buy bank debt and sell bonds backed by home loans.
Interest rates on 30-year fixed-rate mortgages as measured by Bankrate com rose to 6.38 per cent on Thursday from 5.87 per cent last week - before the Treasury said on Tuesday that it would take equity stakes in banks and guarantee new bank debt.
Investors responded to the new guarantee by buying existing bank debt reckoning it could be refinanced with the new government-supported bonds.
An makes the BCE buy-out look either less likely to happen or more likely to cause massive and instant write-downs:
High-yield or leveraged loans have plummeted to a record low of 66.1 cents on the dollar from 88.5 cents on Sept. 2 and from above face value in June 2007 according to Standard & Poor’s LCD.
There are more details in a story about at the moment:
Prices of loans rated below investment grade declined to a record low 66.1 cents on the dollar virtually guaranteeing investors get their money back based on historical recovery rates according to data compiled by Standard & Poor’s.…The selling is being compounded by hedge funds and mutual funds dumping holdings to meet redemptions which may push prices even lower according to analysts at UBS AG.
Barclays Plc the U. K.’s second-biggest bank is auctioning $642 million of loans seized this week from Dallas-based Highland Capital Management LP according to people with knowledge of the sale who declined to be identified because the sale hasn’t been announced. Hedge funds Tudor Investment Corp. run by Paul Tudor Jones and SAC Capital Advisors LLC managed by Steven Cohen sold assets this month to raise cash as stock prices dropped according to people with knowledge of the sales.
BCE common has traded in a 10% range today closing at $34.89. +8.02%.
On another note. I have no idea whether Andrew Lahde was lucky or smart. But either way. !
“I was in this game for money,” Lahde. 37 wrote in a two-page letter today in which he said he had come to hate the hedge-fund business. “The low-hanging fruit i e idiots whose parents paid for prep school. Yale and then the Harvard MBA was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG. Bear Stearns and Lehman Brothers and all levels of our government.
“All of this behavior supporting the Aristocracy only ended up making it easier for me to find people stupid enough to take the other sides of my trades. God Bless America.”
The market performed well today on reasonable volume. Still relatively illiquid and volatile - the performers table is limited to absolute moves of more than 2% today - but improving.
Note that these indices are experimental; the absolute and relative daily values are expected to change in the final version. In this version index values are based at 1,000.0 on 2006-6-30. The Fixed-Reset index was added effective 2008-9-5 at that day’s closing value of 1,119.4 for the Fixed-Floater index.
Asset coverage of 3.2+:1 as of August 31 according to. Coverage now of 2.2+:1 based on BAM. A at 23.37 and. Now with a pre-tax bid-YTW of 11.01% based on a bid of 17.66 and a hardMaturity 2016-3-25 at 25.00. Compare with BNA. PR. A (19.28% to 2010-9-30) and BNA. PR. C (13.39% to 2019-1-10). Closing quote 17.66-20.98. No trades today.
Asset coverage of just under 2.0:1 as of October 2 according to. Now with a pre-tax bid-YTW of 9.01% based on a bid of 8.51 and a hardMaturity 2013-11-29 at 10.00. Closing quote 8.51-98. 3×1. Day’s range. 8.51-00.
Now with a pre-tax bid-YTW of 6.54% based on a bid of 23.01 and a limitMaturity. Closing Quote 23.01-75. 10×10. One trade at 23.02.
Now with a pre-tax bid-YTW of 6.38% based on a bid of 20.68 and a limitMaturity. Closing Quote 20.68-99. 5X5. Day’s range 20.05-80.
Now with a pre-tax bid-YTW of 5.28% based on a bid of 25.00 and a softMaturity 2011-7-30 at 25.00. Closing Quote 25.00-25. 10×5. Day’s range 24.60 (?)-00.
Now with a pre-tax bid-YTW of 7.22% based on a bid of 20.26 and a limitMaturity. Closing Quote 20.26-98. 8×4. Day’s range 19.75-20.99.
Asset coverage of 1.9+:1 as of October 16 according to. Now with a pre-tax bid-YTW of 7.91% based on a bid of 8.78 and a hardMaturity 2014-12-1 at 10.00. Closing quote 8.78-95. 1×2. Day’s range 8.50-62.
Now with a pre-tax bid-YTW of 6.50% based on a bid of 17.65 and a limitMaturity. Closing Quote 17.65-79. 2×5. Day’s range 17.40-80.
Now with a pre-tax bid-YTW of 7.22% based on a bid of 17.00 and a limitMaturity. Closing Quote 17.00-49. 21X4. Day’s range 16.50-36.
Now with a pre-tax bid-YTW of 7.52% based on a bid of 18.75 and a limitMaturity. Closing Quote 18.75-13. 2X4. Day’s range 18.35-20.
Now with a pre-tax bid-YTW of 6.69% based on a bid of 16.83 and a limitMaturity. Closing Quote 16.83-15. 2X3. Day’s range 16.45-00.
Now with a pre-tax bid-YTW of 8.67% based on a bid of 13.90 and a limitMaturity. Closing Quote 13.90-00. 1X365. Day’s range 13.21-99.
Now with a pre-tax bid-YTW of 12.25% based on a bid of 18.79 and 2013-6-30 at 25.00. Compare with BAM. PR. H (11.70% to 2012-3-30). BAM. PR. I (10.74% to 2013-12-30) and BAM. PR. J (11.34% to 2018-3-30). Closing quote 18.79-95. 1X6. Day’s range 18.25-19.25.
Asset coverage of 1.3+:1 as of October 9 according to. Now with a pre-tax bid-YTW of 14.02% based on a bid of 8.13 and a hardMaturity 2011-6-30 at 10.00. Closing quote of 8.13-54. 43×4; day’s range 7.95-25.
Now with a pre-tax bid-YTW of 7.02% based on a bid of 19.22 and a limitMaturity. Closing Quote 19.22-49. 5X4. Day’s range 18.75-50.
Asset coverage of 0.9+:1 as of October 10 according to a. Now with a pre-tax bid-YTW of 13.09% (interest + cap gain) based on a bid of 7.07 and a hardMaturity 2015-3-31 at 10.00. Closing quote 7.07-40. 48×45. Day’s range 6.86-50.
Asset coverage of 2.2+:1 as of September 30 according to. Now with a pre-tax bid-YTW of 8.82% based on a bid of 8.20 and a hardMaturity 2015-12-1 at 10.00. Closing quote of 8.20-46. 83×1. Day’s range 7.99-20.
Now with a pre-tax bid-YTW of 7.44% based on a bid of 15.31 and a limitMaturity. Closing Quote 15.31-05. 12X5. Day’s range 14.90-16.10.
Asset coverage of 1.5+:1 as of October 16 according to. Now with a pre-tax bid-YTW of 7.57% based on a bid of 23.39 and a hardMaturity 2011-2-28 at 25.00. Closing quote of 23.39-40. 33×5. Day’s range of 22.52-40
Asset coverage of just under 1.4:1 as of October 15 according to. Now with a pre-tax bid-YTW of 12.72% based on a bid of 7.35 and a 2014-12-31 at 10.00. Closing quote 7.35-50. 12×18. Day’s range of 7.00-50.
Asset coverage of 1.8+:1 as of October 15 according to. Now with a pre-tax bid-YTW of 8.28% based on a bid of 9.00 and a hardMaturity 2012-12-1 at 10.00. Closing quote of 9.00-25. 5×26. Day’s range of 9.01-25.
Nesbitt crossed 170,600 at 17.80 then another 189,400 at the same price. Now with a pre-tax bid-YTW of 6.63% based on a bid of 17.79 and a limitMaturity.
Nesbitt crossed 50,000 at 17.60 then Desjardins crossed 250,000 at 17.61. Now with a pre-tax bid-YTW of 6.42% based on a bid of 17.61 and a limitMaturity.
CIBC crossed blocks of 70,000; 100,000; 50,000; and 80,000 all at 26.10. Now with a pre-tax bid-YTW of 3.90% based on a bid of 26.09 and a softMaturity 2013-9-29 at 25.00.
TD crossed 75,000 at 24.75 then another 26,500 at the same price. Now with a pre-tax bid-YTW of 4.91% based on a bid of 24.75 and a softMaturity 2013-10-30 at 25.00.
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