Mar 13, 2005

A Corporate Spread Wobble

The FT had this to say about credit spreads last week:
But last week's fall in the price of US Treasury bonds, coinciding with signs that bankers are struggling to complete riskier corporate bond issues, has added to a sense of nervousness in some quarters.
And in more detail here ($$):
Last Wednesday, two private equity firms suffered a setback in their attempt to fund the acquisition of Telcordia, a US supplier of network software, by issuing junk debt. As jittery bond markets caused a sudden spike in long-term interest rates, Telcordia's banks took the unusual step of postponing the completion of its bond issue. A day later, on the anniversary of the 2000 Nasdaq peak, Moody's Investors Service revised its outlook for the technology company, warning the bonds could fall to a rating indicating a substantial risk of default.

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