HYG:NYSE (iShares iBoxx $ High Yield Corporate Bond ETF is moving lower with the overall correction in the pricing of risk. Nothing Bernanke can't fix though. It could be forming a double top. If it breaks the long trend it could hit between the 50 day moving average and support around $83.50. I should have charted this out earlier as more % points could have been made. HYG is up 50% since March when it formed a double bottom, pricing HY at pre-crisis levels. The S&P/LTSA Leveraged Loan 100 Index (actively traded institutional leveraged loans) is testing 2008 resistance as well (chart below). So far this year high yield bond issuance and equity refi's boosted maturities and equity. So are all debt related instruments (bonds, bank loans) priced for perfection or does someones yield have to give eventually (including equity yields).
HYG (Courtesy of Stockcharts.com)
S&P Leverage Loan Index 100
(Snapshot courtesy of Bloomberg: .SPBDLLB)
Articles:
S&P: Whoops, We Wildly Overestimated Junk Bond Default Rates (HYG)(BusinessInsider)
Pimco Sees Korean Dlr Bonds, Asian High-Yield Credits Attractive (WSJ/DJ, 10/26)
U.S. Corporate Loan Prices to Rebound in ‘V’ Shape, ING Says (Bloomberg)
Rethinking Those Hot High-Yield Bonds (BusinessWeek)
Junk Bonds Still Cheap Even After Record Rally, JPMorgan Says (Bloomberg)
High Yield Trade Remains 'Unphased' (SeekingAlpha)
Two Issuers Plan $845M in HY Deals (LeveragedFinanceNews)
Low Rates, Default Outlook Spur Junk Bond Sales (WSJ)
Leveraged Loans Reach October High on M&A Lending, Refinancings (
Bloomberg)
Ascent Investment Management May Raise Fund for Leveraged Loans (
Bloomberg)
