The junk bond sell-off hit emerging markets or into the
next hardest hit
As the market focuses on the fed, an unprecedented junk bond sell-off has been hit.Investors need to be careful: sell-off is also an "epidemic".
Third since the asset management company announced a freeze on 9 Avenue12 redemptions, high-yield bonds, the junk bond risk concerns quickly spread around the world.Then, in Wall Street bosses icahn "high-yield debt's slump is just beginning," remarks, the junk bond market sell-off in the avalanche.
Junk bond, or junk bonds, is refers to is mainly composed of credit rating is low or surplusLee keePoor record of bonds issued by the company.Due to poor credit rating, release rate, the bonds have a higher risk also the characteristics of high yield.In the past few years, junk bonds are the most popular market, especially after the 2008 financial crisis, a lot of money into the high-yield bond market, but as the slump in oil prices, the federal reserve's exit from easy, such bonds continue to slump, rising defaults.
The junk bond sell-off has begun,Emerging marketsThe bond market or into the next hardest hit.
The international monetary fund, according to data from the corporate debt scale in emerging market countries has more than tripled between 2004 and 2014.Institute of international finance, said emerging markets this year with a $600 billion debt maturity, of which 85 billion are denominated in dollars, and nearly $300 billion of non-financial corporate need to finance.This year, in fact, according to s&p, emerging market countries are at new highs since 2009, the number of default company, rose 40% year on year, this also is for many years emerging market corporate debt defaults than the United States for the first time.Data show that in the past 12 months, emerging markets high-yield corporate debt default rate of 3.8%, higher than the 2.5% of the United States.
Indeed, the firewall between market and the market is far from imagination of so strong.If looking at presentThe U.S. stock market, it does not affected by junk debt sell-off is too big.However, the market, according to dataThe s&p 500 indexLow rating company's share price since this year has been stopped by half, or 51%, this also shows the plight of junk bond market.Investors have worried that junk bond sell-off may be conductive to investment grade bonds, which increase the cost of enterprise repurchase.Unfortunately, the enterprise repurchase is generatedU.S. stocksThe bull market one of the important factors.
To make matters worse, the junk bond bubble by widespread small energy companies hold up, this kind of enterprise bond value of more than $80 billion.incommodities"Bear market" serious drag on the energy sector, these junk bonds to investors bring severe challenges.More analysts believe that junk bonds
"Pandora's box" has been opened, how the investors of the subprime mortgage crisis spread to the United States economy is concerned.
However, blackrock, senior director, Peter Fisher does not think junk bond sell-off would harm the U.S. economy as a whole as the subprime crisis.Peter Fisher pointed out that the American economy is good, but a part of the enterprise is not ideal, this is mainly due to the economic and business cycle appeared out of sync, this is the federal reserve to keep interest rates low for too long.However, it is because of low interest rates over time, this makes the market liquidity is not bad, always seeking a way out of funds, the current capital flight and financial crisis and, money will not blindly escape.
So, the junk bond market crash will force the fed to slow downIncreases in interest ratesThe pace?, credit suisse, says this is a kind of risk, the federal reserve to raise interest rates is the only trigger will lead to higher default rates.If the default rate up to a certain degree, may let the fed raising interest rates policy.However, Goldman sachs, said the U.S. junk bonds crash are creating history, but not enough to stop the fed to raise interest rates.