Debt Notes


By Alan Abelson


There are over $1 Trillion of securitized low-grade mortgages outstanding and nearly three-quarters of a trillion dollars worth of mortgages whose adjustable rates are slated to rise over the next year, a heap of them sooner rather than later.  That alone assures an appreciably larger magnitude of pain in the months ahead.

Moreover, as Merrill Lynch’s David Rosenberg astutely reminds us, there’s something like $300 billion in debt sitting on the banks’ balance sheets pledged to fund the last gasp of the M&A boom, commitments made when junk bonds were priced much more attractively.

And we still can look forward, biting our lips as we do, to the doleful impact of hedge funds dumping assets to meet what could easily prove a mighty rush of redemptions.

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