Juan Toro

The Wall Street Journal is publishing a set of well written and detailed articles on the CD0/CLO squeeze. In a very graphic way they have reproduced a map that shows were the most prominent and recent credit problems have blossomed. One sees quickly that it is worldwide phenomenon. Credit squeezes are taken places everywhere: Australia (with meltdowns such as those of the Basis Capital Funds or Absolute Capital) , Russia (with Rosfnet having difficulties to issue a big chunk of bonds) or the US (where the liquidity meltdown cases are too many to name them). It is interesting to see that it affects countries that are in different phases of the monetary cycle. It affects Australia where interest rates are above 6 % and it affects Europe where interest rates are sitting at 4 % and further hikes are envisaged.
In terms of who is affected, a prompt answer seems to be almost any investors seeking large chunks of financing. The WSJ has listed a detailed list of deals that have cancelled or delayed debt offering. The list is just shocking providing a grasp of how many deals are going through problems. These are two very illustrative snapshots. Click below to have a quick idea of the problem.

http://online.wsj.com/public/resources/documents/info-globalblowup07.html

http://online.wsj.com/public/resources/documents/info-BondTurmoil0707-sort.html

Posted on 8 Agosto 2007 in Financial Markets

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