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GalaTime » Bloomberg Readings: LBO bonds, China stocks, Asian bond markets

GalaTime

April 26, 2008

Bloomberg Readings: LBO bonds, China stocks, Asian bond markets

Filed under: investing — Kaushik @ 9:32 am

Rather than receiving the historical average recovery of 42 cents on the dollar in a default, owners of a third of high- yield, high-risk bonds rated B+ or lower may get no more than 10 cents, according to New York-based Fitch Ratings. About 22 percent are likely to get 11 cents to 30 cents.

Along with the surge in bank loans came covenant-lite loans, which typically don’t limit the amount of debt a company can have relative to earnings. A record $141 billion of covenant-lite loans was made last year, according to S&P.

China’s shares are a “sell” even after the government stepped in to support the world’s fourth- biggest stock market, according to Morgan Stanley and Credit Suisse Group.

Corporate earnings growth this year may disappoint, Morgan Stanley analysts Jerry Lou and Allen Gui said in a report today. Chinese companies’ Hong Kong-listed `H shares’ are more attractive than yuan-denominated `A shares,’ Credit Suisse’s Vincent Chan wrote in a separate note.

This is after the 50% drop in the Chinese market!

The Newport Beach, California-based firm’s Pimco Total Return Fund boasts $125 billion of assets — and an E.F. Hutton vibe. When Pimco talks, people listen. And the fund’s manager, Bill Gross, may be the closest thing the bond market has to a household name.

Hodge’s message, delivered at a conference organized by the Asian Development Bank in India’s business capital, is an encouraging one for Asia’s debt issuers: “We’re ready and able to supply the demand for Asian markets — we’re just waiting for quality investments.”

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DISCLAIMER: The author is not a registered stockbroker nor a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity, index or any other financial instrument at any time. While he believes his statements to be true, they always depend on the reliability of his own credible sources. The author recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and that you confirm the facts on your own before making important investment commitments.