High-Yield Credit Carnage Round-Up

High-yield credit carnage round-up. Source: Bloomberg

It isn’t 2007 all over again

There’s been plenty of speculation in the financial media that the closure of the Third Avenue Focused Credit Fund at the end of last week marked the beginning of a new financial crisis, drawing parallels with the closure of Bear Stearns and BNP Paribas credit funds back in 2007.

See also:

• Third Avenue Smoke Doesn’t Mean High-Yield Fire
• High-Yield: UBS “Barbarians at the Gate”

According to Bloomberg’s analysis, this is rubbish. Traders and analysts point out that now, eight years on from the crisis, and five years after the Dodd-Frank Act, banks are now better capitalized and have smaller inventories of thinly traded debt, meaning that they’re unlikely to be materially affected...