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Buzz and Banter



Convertible bonds are a subset of the corporate bond market. All the things Brian has mentioned as indicators he is watching for a possible turn down in the corporate bond market are happening right now in this part of the market. They may be happening for a peculiar reason, but they are happening to an extreme degree. There are only sellers in this convertible bonds, with dealers full of inventory and marking down bids whenever something trades. Market participants are holding their collective breath and i suspect that the damage is worse than what their returns actually show.

I believe this may be a precursor to the overall corporate bond market given the special role convertible bonds have played in the market over the last several quarters: they have been the vehicle of choice for companies in rolling and restructuring debt.

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