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Strategies & Market Trends : IPPs and Merchant Energy Co.s
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To: KyrosL who wrote (226)9/26/2002 3:52:27 PM
From: Mark Adams   of 3358
 
re ILD/Bonds

I would think certain players would arb the bonds and exchange traded debt. If anything, maybe this comments on the lack of visibility into bond pricing and high friction costs associated with moving into/out of bonds.

Somewhere else I seem to remember reading a comment about fallen angels (bonds that were investment grade now junk) trading at higher yields than similar rated debt that started out as junk. Asserted as evidence that the market (bond in this case) was irrational. But I also read somewhere else that debt issued as junk usually has better protection built in than debt issued as investment grade or better.

Nice if we could track bond quotes of various players at a glance. I see EP-C trading at 17.90 ask is yielding 13.27% rated baa3 vs ILD trading at 18.90 yielding 10.4% rated at ba2. Hmm. Is the market pricing in future downgrade risk?
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