Tuesday, September 8, 2009

Today in the debt markets

AlphaNinja - A few things of note.

-->>Vale S.A., the Rio-based metals company, is rumored to be selling debt at a scant 5.5% interest rate. They likely don't even need the money all that bad. Rather, they're happy to borrow at 5.5% and invest it elsewhere, be it internally or through acquisitions. The company's Free Cash Flow Yield is about 7%.

-->>RBC thinks that Mexico's debt will soon be downgraded by S&P and Fitch. Dependant on oil for 40% of its budget, Mexico's deficit looks to be 3% of GDP. So they're running a 3% deficit and have a credit rating of BBB+, while we Yankees have a deficit this year of about 12% of GDP yet we enjoy a pristine AAA credit rating? Something's wrong, and it's the rating.

-->>Kraft's Credit Protection Cost has increased today on the news that they're after Cadbury. Still a very low default rate however:

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