Tuesday, February 05, 2008

CDO Market Almost Frozen

by Bill McBride on 2/05/2008 01:53:00 PM

From Bloomberg: CDO Market Is Almost Frozen, Merrill, JPMorgan Say

Buying and selling of collateralized debt obligations based on mortgage bonds, high-yield loans or preferred shares has ground to a near-halt, traders said at the securitization industry's largest conference.

``We're definitely in a period of very low liquidity at the moment, which has actually been dropping precipitously in the last few weeks,'' Ross Heller, an executive director at JPMorgan Securities Inc., said yesterday ...
The credit crunch just won't go away. And just wait until some of the LBO debt blows up too.
Twenty-seven percent of the approximately $74 billion in bonds used in LBOs the last two years classify as ``distressed'' because they yield at least 10 percentage points more than Treasuries, Bloomberg data show.