The Commercial Paper market is set to roll over a ton of debt over the next couple of weeks. According to this blog quoting newsweek:
The shaky U.S. credit markets will face a critical test over the next few weeks, as companies try to find buyers for hundreds of billions of dollars in short-term debt that is set to expire. Corporate borrowers are expected to struggle in refinancing their debts, and the repercussions may go far beyond the companies in question. …
The tightest squeeze may come in what’s known as the asset-backed commercial paper market. … About $417 billion worth of asset-backed commercial paper is scheduled to come due during the weeks of Sept. 10 and Sept. 17, or about half of the $959 billion market, according to Sherif Hamid, an investment-grade credit strategist at Lehman Brothers.
I think these images from the Fed, speak for themselves.
This in the midst of a week where big banks are trying to market billions of buyout debt and BSC, GS, LEH, and MS all announce earnings.
Could be a choppy week indeed. I am investigating SKF and IAI as a way to express a view.
Tyler | 18-Sep-07 at 9:22 am | Permalink
The biggest question now is if the Fed is too late.
“Some analysts think the Bernanke Fed, whose approach to policy changes seems more deliberative and model-driven than the approach taken by Greenspan, is already behind the curve.”
Part of Greenspans genius is the fact that he often left economic indicators on the wayside while relying mostly on his gut feelings about policy changes. So, is Bernanke too academic about monetary policy? We will see what happens today during the FOMC.
Tyler | 18-Sep-07 at 9:25 am | Permalink
http://media.economist.com/media/audio/WorldNextWeek140907.mp3
DAL | 18-Sep-07 at 9:08 pm | Permalink
Bigger that expected by some, but interestingly an article in the Journal said a few “including Goldman and Merrill” were anticipating a 50 bps cut. Its nice to have friends in high places.
Glad to see the market rally. Wonder if this will take any immediate pressure off on the buyouts. Hard to see that price so quickly, but maybe so.