Monday, May 4, 2009

Loans Versus Bonds Relative Value: Week Of April 30

Just when we thought the heat-seeking short squeeze in credit land may be subsiding, three new bonds rip tighter: old shorter max-pain name Neiman Marcus, whose bonds tightened by 540 bps, Graham Packaging which ripped by 550 bps and Huntsman Int'l which tightened by 425 bps. As in the last week, the rolling equity squeeze in unique stocks and sectors has caused comparable squeezes in corresponding highly-shorted credits.

Some odd names that stand out this week with respect to a disproportionate widening in loans and a tightening in bonds are: BE Aerospace, Centennial Communications, Constellation Brands, First Data Corp and Pantry, although the moves are marginal enough to be likely noise.

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