Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: patron_anejo_por_favor who wrote (291460)	11/15/2010 2:04:04 PM
From: Pogeu Mahone	Read Replies (1) \| Respond to of 306849

Those comics cannot compete with real world hilarious comedy:Good one.....on cue, especially the "But lending standards soon grow lax" frame. This has me howling;0) ======================================== Mexico's 100-Year Bond Sale Signals `Bubble' Building in Market, RBC Says By Andres R. Martinez - Oct 7, 2010 3:56 PM ET Mexico’s $1 billion sale of bonds due in 100 years raises concern the credit market is a approaching a “bubble” that’s blinding investors from making wise choices, RBC Capital Markets said in a report today. “The market overlooks fundamentals at its peril,” RBC analysts Roger Appleyard and Simon Ballard wrote in a note titled “I’m Forever Blowing Bubbles.” “Enjoy the party while it lasts, but caveat emptor; the music will surely stop at some stage and when the party ends, the hangovers could be extreme.” Mexico took advantage of global investor demand for higher- yielding, emerging-market debt amid record-low interest rates in Europe and the U.S. to sell the longest-maturity debt ever issued by a Latin American country. The government has raised $5.1 billion this year by selling debt in euros and dollars. Mexico plans to sell 150 billion yen ($1.82 billion) of 10-year Samurai debt as soon as Oct. 20, according to a person familiar with the offering. “We are left feeling that this sort of trade is highly reminiscent of the height of the bull market era,” the analysts wrote. “It adds to our concern that the credit market is now pushing itself back into bubble territory, with memories still all too fresh as to how such a buoyant mood was brought to its knees last time.” Market Obstacles Investors may be overlooking “myriad obstacles” in the credit markets including “the continued denouement of the sovereign debt credit and possible restructuring in both Greek and Irish bond markets,” the London-based analysts wrote. The prospect of higher interest rates next year will “risk making longer duration, lower quality investments today look far less attractive,” said the analysts, who added that they’re not changing their overall view on corporate credit markets. The sale may pave the wave for other governments to sell similar-maturity debt, said Guillermo Osses, who helps oversee $50 billion in emerging-market assets at Pacific Investment Management Co. “It wouldn’t be surprising, given how well this bond has performed in the market,” Osses, who’s based in Newport Beach, California, said in a telephone interview yesterday. “Brazil, for example, could fit very well that type of description.” A Brazil finance ministry spokeswoman didn’t immediately return a call seeking comment. The person declined to be named in accordance with official policy. Low Yield Mexico begun studying issuing 100-year bonds about a year ago and made a decision after Rabobank Nederland NV and Norfolk Southern Corp. sold similar maturity debt in the last two months, said Gerardo Rodriguez, head of the finance ministry’s public debt unit, in an interview yesterday. The government wanted to take advantage of record low yields to fund operations, he said. The yield on Mexico’s 5.125 percent dollar debt due in January 2020 fell to a record low of 3.607 last week. The yield on the 100-year bonds rose two basis points, or 0.02 percentage point, to 5.794 percent at 10:05 a.m. New York time, according to BNP Paribas e-trading. Mexican bonds yield 156 basis points more than U.S. treasuries, according to JPMorgan Chase & Co. To contact the reporter on this story: Andres R. Martinez in Mexico City at amartinez28@bloomberg.net To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net