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Friday, March 13, 2009


leveraged loan deleveraging

zero hedge cites bloomberg on the imminent unwind of the CLO universe.

The bottom line is that all those who claim that deleveraging is done, have no idea what they are talking about. While the Moody's Death Watch list accounts for a little over $200 billion, thanks to the greed of packaging and securitizing leveraged loan, the world is facing near half a trillion in defaults as the market for CLOs disappears, and the only bidders remaining are those laser-focused on specific names, and usually with Investment Grade ratings. And the last thing to keep in mind is that CLOs are not alone: a default wave among the CLO pool will promptly drag with it all other forms of securitization, whose current interdependent existence is balanced more precariously than a house of cards on the head of a pin.

will the fed come in with a TALF-for-trash-debt?

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