Living my life as an exclamation, not an explanation...


It should be noted by readers that Absinthe is not a lawyer, and anything posted in this blog should not be used as a substitute for professional advice from a lawyer

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  Friday, November 21, 2008

I came across this today; a discussion of current and historical corporate bond rates over the past 90 years.  The article compares the rate of return on Aaa rated bonds to the rate of return on Baa rated bonds.  When lenders are very adverse to taking risks (such as the Great Depression, for instance), the RoR on Aaa and Baa rated bonds are quite disparate.  In good economic times the rates are fairly similar.  In recent months, the RoR on these two types of bonds has become increasinly disparate.  So much so, that the current rate spread of 3% is the worst it's been since the 1930's.  We still have a ways to go until the spread matches the 5% rate spread at the height of the Great Depression, but that is one nasty steep slope we are currently climbing.  If that slope continues, it won't take long...
9:59:51 PM    comment []

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