| The feckers want more QE off that money tree.... 15:18 - Mar 9 with 872 views | BanksterDebtSlave |
Debt deflation incoming too....Minsky moment....it's like our economy is built from string !!
17m ago14:44
US corporate bonds could face 'Minsky Moment'
https://www.theguardian.com/business/live/2020/mar/09/markets-plunge-crash-finan
Richard Partington
If the stock market crash isn’t bad enough, the fallout in the US bond markets is perhaps even scarier to contemplate - particularly given a boom in risky borrowing by US oil and gas firms in recent years.
Deutsche Bank has just issued a note warning there could be a “Minsky moment” for high-yield American bonds - in a nod to the economist Hyman Minsky’s theory on how markets can crash amid widespread panic following periods of speculative investment.
The US subprime collapse of 2008 is regarded as one such moment, so the comparison is ominous to say the least...
The bank’s analysts warn that defaults - companies being unable to repay or refinance their debts - are now inevitable, with around $13bn of debts due for repayment before the end of 2021 from the most heavily-indebted oil and gas firms.
In a shocking sign of the chaos to come, it says the distress ratio for US oil and gas high yield debt - defined as the proportion of debt trading with a spread of at least 1,000 basis points (in other words, bonds with yields that are more than 1,000 basis points higher than a reference yield such as on a US Treasury bond) - was already 62.3% as of Friday before today’s oil price collapse.
To put that in context, it says the distress ratio hit 43.9% in March 2016 when oil prices last crashed. In good times, when the oil price peaked in late 2018, it was 4.8%. In other words, well more than half of heavily-indebted US energy companies have borrowing costs that are going through the roof. Gulp.
In another illustration of how risky the situation is, Standard & Poors says the percentage of oil and gas borrowers with negative outlooks on their credit rating - which gauges their financial strength and is key for borrowing money on reasonable terms - is around 33%, which is well above the long-term average of 19%.
Central bankers have been worrying about the US high yield bond markets for quite a while now already. This could be the start of something quite dramatic indeed.
[Post edited 9 Mar 2020 17:13]
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| The feckers want more QE off that money tree.... on 17:20 - Mar 9 with 772 views | hampstead_blue |
Go long on oil!
Tesla down 10%.....get some of that as well. |  |
| Assumption is to make an ass out of you and me.
Those who assume they know you, when they don't are just guessing.
Those who assume and insist they know are daft and in denial.
Those who assume, insist, and deny the truth are plain stupid.
Those who assume, insist, deny the truth and tell YOU they know you (when they don't) have an IQ in the range of 35-49.
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| The feckers want more QE off that money tree.... on 17:48 - Mar 9 with 729 views | Radlett_blue |
While high yield energy debt may well be in trouble, that sector is no more than 11% of the total US high yield market so this is unlikely to be anything close to the 2008 Financial Crisis unless the whole global economy tanks, in which case all bets are off. |  |
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| The feckers want more QE off that money tree.... on 18:00 - Mar 9 with 706 views | HARRY10 |
| The feckers want more QE off that money tree.... on 17:20 - Mar 9 by hampstead_blue |
Go long on oil!
Tesla down 10%.....get some of that as well. |
I expect all of this wull be blamed on Gordon Brown fairly soon
Meanwhile I shall shed a tear or two for Russia and Saudi Arabia as their oil income plummets  |  | | |
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