Corporate Bond risk rises

• "Corporate bond risk rose to a two-year high in the US and Europe, according to credit-default swap indexes that allow investors to speculate on the ability of companies to repay debt or hedge against the risk they won't. Indexes tied to the risk of owning high-yield, high-risk loans fell to record lows, suggesting demand is deteriorating for leveraged buy-out debt." source: The Age
• "The newest index launched last week, however, indicated that loans from the first half of 2007 are still plagued by the deficiencies seen in those from the previous year. The BBB-minus slice of the newest ABX version started to trade at 49.5 cents on Thursday and the AAA piece at 99 cents. The lax underwriting standards that make loans more susceptible to delinquencies and defaults continued even in the first few months of 2007, said Norman Cerk, partner at Balestra Capital, a New York-based hedge fund. The newest index could be "worse" than the previous index, Cerk said. "Even the very safe AAA and AA could see losses."" source: forbes