All is Still Not Well in Credit Land

Corporate bond analysis via Across the Curve:

Regarding the near term course of spreads I did speak to one portfolio manager who held a less than sanguine view.

He cited three factors for his caution:

• The injection of public money is a worthy first step but the crisis will not resolve until there is a groundswell of optimism from private investors.
• The second factor is time. It will take time to repair and rehabilitate the market.
• Finally, the economic fundamentals are suggestive of a sharp contraction lasting three quarters or four quarters. Against that background, a cautious approach to corporates is in order.