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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Spekulatius who wrote (32903)	11/30/2008 7:28:54 PM
From: Grommit	Read Replies (1) \| Respond to of 78753

- it's the spread of commercial mortgage rates over the treasury yield that is at all time high. This points to a specific problem with commercial RE not a problem with the US$ value. I think that if you compare yield on any corporate debt to treasuries, that you will find the spreads to be high. The problem is not specific to RE, it is a problem for all debt that has to be refinanced. here is a 11/20 news link: "NEW YORK - An unrelenting flight from risky securities sent yields on bonds that finance corporate operations and residential and commercial real estate to record highs on Thursday, exacerbating the credit squeeze tipping the U.S. economy into recession... Yield spread premiums on a commercial mortgage-backed securities index roared higher to records for a third straight day, leading deterioration in fixed-income securities on concerns that economic weakness will boost defaults on loans that depend on office building and shopping mall rents...Illustrating corporate debt stress, U.S. credit default swaps widened to record levels on Thursday that suggest investors expect the worst period of investment-grade corporate bond defaults since at least 1980, according to analysts. The main investment-grade credit default swap index widened to a record 282.5 basis points in late trade, according to data from Markit Intraday. The cash corporate bond market was "falling apart" with spreads gapping wider, one trader said." ref: reuters.com Maybe corp debt rates never come down to recent levels. That would be a nasty monkey wrench tossed into in the system. I would think that the fed/treas will do what is reqd to move the rates down. But, what do I know? Our first article looks at the bold new steps taken this week by the Federal Reserve and the Treasury economist.com