{"id":21020,"date":"2016-06-07T19:15:39","date_gmt":"2016-06-08T00:15:39","guid":{"rendered":"http:\/\/olduvai.ca\/?p=21020"},"modified":"2016-06-07T19:15:39","modified_gmt":"2016-06-08T00:15:39","slug":"this-is-how-draghi-will-sock-it-to-investors-that-werent-invited-to-the-secret-meetings","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=21020","title":{"rendered":"This is How Draghi Will Sock it to Investors that Weren\u2019t Invited to the Secret Meetings"},"content":{"rendered":"<header>\n<h3 class=\"entry-title\"><a href=\"http:\/\/wolfstreet.com\/2016\/06\/07\/ecb-draghi-plans-to-sock-it-to-corporate-bond-investors-not-invited-to-secret-meetings\/\">This is How Draghi Will Sock it to Investors that Weren\u2019t Invited to the Secret Meetings<\/a><\/h3>\n<\/header>\n<div class=\"entry-content\">\n<p><strong>They\u2019re all getting ready for Wednesday.<\/strong><\/p>\n<p>Here\u2019s what Draghi has accomplished recently: the prices of euro-denominated corporate debt have soared. The average yield of investment-grade debt is on the verge of dropping below 1%. A good part of the \u20ac916-billion market for corporate euro debt is already below 1%, according to\u00a0<a href=\"http:\/\/www.bloomberg.com\/news\/articles\/2016-06-06\/draghi-smashes-corporate-yields-to-1-before-a-bond-is-bought\" target=\"_blank\">Bloomberg<\/a>. Highly rated corporate debt with shorter maturities is trading at negative yields, where brainwashed investors engage in the absurdity of paying for the privilege of lending money to corporations.<\/p>\n<p>Companies, including US companies, are scrambling to take advantage of this free money: They issued over \u20ac50 billion of euro-debt in May, the second-busiest month on record. On Monday, at least six investment-grade and junk-rated deals were announced.\u00a0One of them was Air Liquide SA, which sold \u20ac3 billion in investment-grade debt. Four of the five parts of the deal priced with a yield below 1%!<\/p>\n<p>They\u2019re all getting ready for Wednesday.<\/p>\n<p>June 8 is the propitious day everyone has been waiting for: the ECB \u2013 which is already buying government debt, covered bonds, and asset backed securities \u2013 begins buying euro-denominated corporate bonds. Maturities will range from six months to 30 years. It will buy these bonds either in the secondary market, where previously issued bonds are traded, or in the primary market, thus handing its freshly printed euros directly to the companies (<a href=\"http:\/\/wolfstreet.com\/2016\/06\/03\/helicopter-money-drops-on-europe-but-not-for-normal-folks\/\" target=\"_blank\">\u201chelicopter money\u201d for corporations<\/a>).<\/p>\n<p>\u201cThe prospect of average yields below 1% is very scary,\u201d Juan Esteban Valencia, a credit strategist at Societe Generale in Paris told Bloomberg. \u201cInvestors are being pushed outside their comfort zone to sectors like high-yield debt, where they may not have expertise.\u201d<\/p>\n<p>And where they won\u2019t be paid for the risks they\u2019re taking.<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>This is How Draghi Will Sock it to Investors that Weren\u2019t Invited to the Secret Meetings They\u2019re all getting ready for Wednesday. Here\u2019s what Draghi has accomplished recently: the prices of euro-denominated corporate debt have soared. The average yield of investment-grade debt is on the verge of dropping below 1%. A good part of the [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[83,195,233,282,1044,4254,4255],"class_list":["post-21020","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bloomberg","tag-debt","tag-ecb","tag-european-central-bank","tag-mario-draghi","tag-wolf-richter","tag-wolfstreet"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/21020","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=21020"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/21020\/revisions"}],"predecessor-version":[{"id":21021,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/21020\/revisions\/21021"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=21020"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=21020"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=21020"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}