Credit Valuations This Week: RBS

RBS strategists Edward B Marrinan, Edward Young, Gregory Kamford and Nicholas Kirschner consider whether credit market valuations in the week to November 8, 2013, are, in their words, overly ‘frothy’ or ‘bubbly.’

Risk appetite

“Reach for yield has manifested in a powerful rise in residential and commercial real estate values, a multi-year rally in equities that has seen the S&P 500 (INDEXSP:.INX) more than double from its post-crisis low in March 2009, and a remarkable renaissance in demand for both high and low quality corporate bonds, leveraged loans and structured products,”  say the RBS analysts.

Yet, they qualify that somewhat alarming statement,...