What, however, people do not know is that under ZIRP, when every basis point of debt return over 0% is praised, and an epic scramble ensues among hedge for any yielding paper no matter how worthless, the balance sheets of companies just do not matter. In other words, for companies that have massive leverage, high interest rates, negative cash flow, which all were corporate death knells as recently as 2008, the capitalization structure is completely irrelevant.
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That’s from the anonymous Tyler Durden at the Zero Hedge, discussing the boom in high yield debt. The unprecedented or uncharted scale of interventionism and inflationism has been massively distorting the way asset markets are being valued. The result has been magnified volatility and boom bust episodes.
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