This is the moment when yield-chasing turns into a massacre.
“Sell first, ask questions later.”
Fifth deal croaked in August. Moody’s has a cow over Ancestry.com’s deal. Deals had to be sweetened to find buyers. Retail investors bail out.
Murk everywhere. There isn’t even an agreement what “leveraged loans” are. No, banks are not off the hook. That was wrong too. They hold 57% of these instruments, the Bank of England found.
Kudos to the private equity firm. These things don’t happen overnight for companies. They happen overnight only for investors.
Forced selling in the once red-hot $1.3-trillion “leveraged loan” market.
The Junk-Bond Market Just “Puked.”
The Fed has warned about them, and investors fear a run-on-the-fund.
Instead of “bubble” or “collapse,” it uses “valuation pressures” and “broad adjustment in prices.” Business debt, not consumer debt, is the bogeyman this time.
In detail: ‘Collateral Stripping,’ ‘Incremental Facilities,’ ‘Cov-Lite,’ & ‘EBITDA Add-Backs’