{"id":939,"date":"2014-10-31T20:31:44","date_gmt":"2014-11-01T00:31:44","guid":{"rendered":"http:\/\/olduvai.ca\/?p=939"},"modified":"2014-10-31T20:31:44","modified_gmt":"2014-11-01T00:31:44","slug":"who-will-suffer-from-a-leveraged-credit-shakeout-enterprising-investor","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=939","title":{"rendered":"Who Will Suffer from a Leveraged Credit Shakeout? | Enterprising Investor"},"content":{"rendered":"<p><a href=\"http:\/\/blogs.cfainstitute.org\/investor\/2014\/10\/30\/who-will-suffer-from-a-leveraged-credit-shakeout\/\">Who Will Suffer from a Leveraged Credit Shakeout? | Enterprising Investor<\/a>.<\/p>\n<p style=\"outline-width: 0px; outline-style: initial; outline-color: initial; font-size: 16px; vertical-align: baseline; background-image: initial; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; background-position: initial initial; background-repeat: initial initial; padding: 0px; margin: 0px 0px 1.5em 0px; border: 0px initial initial;\">Of all the noteworthy moments from the\u00a0<a style=\"font-size: 16px; vertical-align: baseline; background-image: initial; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; color: #003da5; text-decoration: none; background-position: initial initial; background-repeat: initial initial; padding: 0px; margin: 0px;\" title=\"Insights from the 2014 CFA Institute Fixed-Income Management Conference | @CFAevents\" href=\"http:\/\/bit.ly\/11EJs5T\">2014 CFA Institute Fixed-Income Management Conference<\/a>, the bombshell may have been the default call from Martin S. Fridson, CFA.<\/p>\n<p style=\"outline-width: 0px; outline-style: initial; outline-color: initial; font-size: 16px; vertical-align: baseline; background-image: initial; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; background-position: initial initial; background-repeat: initial initial; padding: 0px; margin: 0px 0px 1.5em 0px; border: 0px initial initial;\">Fridson, CIO at Lehmann Livian Fridson Advisors, has been a leading figure in the high-yield bond market since it was known as the \u201c<a style=\"font-size: 16px; vertical-align: baseline; background-image: initial; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; color: #003da5; text-decoration: none; background-position: initial initial; background-repeat: initial initial; padding: 0px; margin: 0px;\" title=\"Definition for Junk Bond | Investopedia\" href=\"http:\/\/www.investopedia.com\/terms\/j\/junkbond.asp\">junk bond<\/a>\u201d market \u2014 and he sees as much as $1.6 trillion in high-yield defaults coming in a surge he expects to begin soon.<\/p>\n<p style=\"outline-width: 0px; outline-style: initial; outline-color: initial; font-size: 16px; vertical-align: baseline; background-image: initial; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; background-position: initial initial; background-repeat: initial initial; padding: 0px; margin: 0px 0px 1.5em 0px; border: 0px initial initial;\">\u201cAnd this is not based on an apocalyptic forecast,\u201d he assured the audience.<\/p>\n<p style=\"outline-width: 0px; outline-style: initial; outline-color: initial; font-size: 16px; vertical-align: baseline; background-image: initial; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; background-position: initial initial; background-repeat: initial initial; padding: 0px; margin: 0px 0px 1.5em 0px; border: 0px initial initial;\">High-yield bonds, typically issued with credit ratings at the bottom of the scale, tend to suffer default surges during troughs in the credit cycle. The first high-yield default surge occurred from 1989 to 1992, and encompassed the\u00a0<a style=\"font-size: 16px; vertical-align: baseline; background-image: initial; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; color: #003da5; text-decoration: none; background-position: initial initial; background-repeat: initial initial; padding: 0px; margin: 0px;\" title=\"The Collapse of Drexel Burnham Lambert | The New York Times\" href=\"http:\/\/www.nytimes.com\/1990\/02\/14\/business\/collapse-drexel-burnham-lambert-drexel-symbol-wall-st-era-dismantling-bankruptcy.html\">collapse of Drexel Burnham Lambert<\/a>. The second surge ran from 1999 to 2003, following\u00a0<a style=\"font-size: 16px; vertical-align: baseline; background-image: initial; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; color: #003da5; text-decoration: none; background-position: initial initial; background-repeat: initial initial; padding: 0px; margin: 0px;\" title=\"Market Crashes: The Dotcom Crash | Investopedia\" href=\"http:\/\/www.investopedia.com\/features\/crashes\/crashes8.asp\">the bursting of the dot-com bubble<\/a>, and the third happened in the midst of the global financial crisis, from 2008 to 2009.<\/p>\n<p style=\"outline-width: 0px; outline-style: initial; outline-color: initial; font-size: 16px; vertical-align: baseline; background-image: initial; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; background-position: initial initial; background-repeat: initial initial; padding: 0px; margin: 0px 0px 1.5em 0px; border: 0px initial initial;\">Fridson suggests the next default surge will be larger than the last three combined. Each surge saw an average annual high-yield default rate above 7% (which, if extended over a multi-year period, can add up to real money).<\/p>\n<p style=\"outline-width: 0px; outline-style: initial; outline-color: initial; font-size: 16px; vertical-align: baseline; background-image: initial; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; background-position: initial initial; background-repeat: initial initial; padding: 0px; margin: 0px 0px 1.5em 0px; border: 0px initial initial;\">&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Who Will Suffer from a Leveraged Credit Shakeout? | Enterprising Investor. Of all the noteworthy moments from the\u00a02014 CFA Institute Fixed-Income Management Conference, the bombshell may have been the default call from Martin S. Fridson, CFA. Fridson, CIO at Lehmann Livian Fridson Advisors, has been a leading figure in the high-yield bond market since it [&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":[176,200,402,508],"class_list":["post-939","post","type-post","status-publish","format-standard","hentry","category-economics","tag-credit-cycle","tag-default","tag-high-yield-bonds","tag-martin-s-fridson"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/939","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=939"}],"version-history":[{"count":0,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/939\/revisions"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=939"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=939"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=939"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}