{"id":4926,"date":"2015-01-27T21:38:30","date_gmt":"2015-01-28T02:38:30","guid":{"rendered":"http:\/\/olduvai.ca\/?p=4926"},"modified":"2015-01-27T21:38:30","modified_gmt":"2015-01-28T02:38:30","slug":"junk-bond-bubble-implodes-beyond-energy-deals-scuttled-yields-soar-suddenly-insufficient-demand","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=4926","title":{"rendered":"Junk-Bond Bubble Implodes Beyond Energy, Deals Scuttled, Yields Soar, Suddenly \u201cInsufficient Demand\u201d"},"content":{"rendered":"<h3 class=\"entry-title\"><a href=\"http:\/\/wolfstreet.com\/2015\/01\/27\/junk-bond-bubble-implodes-beyond-energy-deals-scuttled-yields-soar\/\" target=\"_blank\">Junk-Bond Bubble Implodes Beyond Energy, Deals Scuttled, Yields Soar, Suddenly \u201cInsufficient Demand\u201d<\/a><\/h3>\n<p>The year 2015 has just started, and already there have been two junk-bond casualties: the first on Thursday, and the second one today. They weren\u2019t energy companies. Energy companies don\u2019t even try anymore. They\u2019ve been locked out. Both deals had to be scuttled because, even at the high yields they offered, there were suddenly no buyers. 2014 had been a harbinger: 17 junk-bond deals for $5.8 billion in total were shelved, most of them during the last four months.<\/p>\n<p>Ever since the Fed unleashed its waves of QE, institutional investors, driven to near insanity by the relentless interest rate repression, have been chasing yields ever lower in a desperate effort to get some kind of return. In the process, junk bonds and leveraged loans boomed and spiraled to such heights that the Fed \u2013 which is never able to see\u00a0<em>any<\/em>\u00a0bubbles \u2013 and other bank regulators began fretting over a year ago about the risks they posed to \u201cfinancial stability.\u201d And in December, it was\u00a0the Treasury that hit the alarm button about leveraged loans [read\u2026\u00a0<a href=\"http:\/\/wolfstreet.com\/2014\/12\/08\/who-gets-to-eat-the-losses-from-cyclical-excesses-treasury-warns-congress-and-investors-about-leverage-loans\/\" target=\"_blank\">Treasury Warns Congress (and Investors): This Financial Creature Could Sink the System<\/a>].<\/p>\n<p>Now QE Infinity is gone, interest-rate hikes are vaguely shaping up on the horizon, and institutional investors \u2013 bond mutual funds, for example \u2013 are getting second thoughts.<\/p>\n<p>Junk bond issuance, at $13.4 billion so far this year, is down 32% from the same period in 2014, according to S&amp;P Capital IQ\/LCD\u2019s\u00a0<a href=\"http:\/\/www.highyieldbond.com\/us-high-yield-bond-issuance-hit-4-8b-last-week-13-4b-ytd\/\" target=\"_blank\">HighYieldBond.com<\/a>. Lower-rated companies are \u201cforced to pay-up significantly,\u201d explained LCD\u2019s Joy Ferguson. And some of them, like the Presidio Holdings deal today, are having trouble finding\u00a0<em>any<\/em>\u00a0buyers \u2013 despite offering\u00a0a yield of 11% or higher.<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Junk-Bond Bubble Implodes Beyond Energy, Deals Scuttled, Yields Soar, Suddenly \u201cInsufficient Demand\u201d The year 2015 has just started, and already there have been two junk-bond casualties: the first on Thursday, and the second one today. They weren\u2019t energy companies. Energy companies don\u2019t even try anymore. They\u2019ve been locked out. Both deals had to be scuttled [&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":[86,1806,2964,402,1297,661],"class_list":["post-4926","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bond-bubble","tag-bubble","tag-energy-companies","tag-high-yield-bonds","tag-junk-bonds","tag-qe"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/4926","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=4926"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/4926\/revisions"}],"predecessor-version":[{"id":4927,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/4926\/revisions\/4927"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=4926"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=4926"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=4926"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}