Great. Let’s party like it’s 2007 all over again:
Dec. 15 (Bloomberg) — The three largest U.S. banks are preparing for a comeback in the market for collateralized debt obligations backed by high-yield, high-risk loans, two years after issuance tumbled when credit markets seized up.
JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. are approaching managers of leveraged loans to offer terms for new collateralized loan obligations following a record rally this year in the debt, according to people familiar with the discussions who declined to be identified because the talks are private. The highest-rated portions of CLOs have climbed to 89 cents on the dollar from a record low of 69 cents in April, according to Morgan Stanley data.
This, along with the news the Europeans want to kick-start securitization again shows we have learned nothing, but like Scott Wieland (who I enjoy listening to immensely) trying to kick the heroin habit, it’s just so hard.
How many times are we going to go to rehab to kick our habit of wanting a cheap liquidity fix? The Betty Ford Clinic with its rehab program of deflation, risk aversion, and illiquidity remains open to receive us…