Market junk debt signals a 44% probability of a recession in the US in the segment next year, as the report shows Martin Fridso on, Mani manager Advisors LLC Fridson. - Materials AMarkets.
Fridson not alone in his pessimistic view of the market. So, Jeff Gundlach sees a 1/3 chance that this year will come a crisis, and predictors of Standard & Poor's on Monday this week, noted that the situation of corporate borrowers worldwide since the beginning of the worst financial crisis in the late 2000s. All this, of course, on expectations the Fed raising rates. The regulator has promised to raise 2-3 times in 2016. And yet all the circumstances favored tighter - especially low unemployment. Fridson assess the dynamics of spreads on trash duty since 1986, using data from Bank of America Merrill Lynch.
As of January 8, investors have requested an additional 7.39 percentage points the rate of return to trezheris for instruments with high risk. For a growing economy, the normal value is considered to be 5.2%. For crisis economy standard spread - it's something about 10.19%. On the basis of these data, the expert concluded that the probability of a recession is 43.9% - this forecast in the same spirit as the fresh rating from Standard & Poor's Capital IQ. This Citigroup analysts expect the 22 cases of default on the segment next 5 years in the segment of corporate junk debt (based on the dynamics of the index Markit CDX North America High Yield Index).