Conceptually, Apple could swallow Microsoft with a little help from the corporate debt market.
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Ever since the policy began, we have seen big companies benefit from cheaper borrowing costs, as long as they were in a position to borrow from the corporate debt market, not their local bank.
If you want to dwell on one financial worry for 2007, the corporate-debt market is the place to start.
Luz Padilla of DoubleLine indicated in the call that while there may be less opportunities in emerging market government debt, there are still opportunities in emerging market corporate and local currency debt.
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Investors would have been better off in investment grade corporate and emerging market debt.
The bubbles during the past decade in both stockmarkets and, later, the market for corporate debt highlighted serious flaws with both of these ideas, or at least with the way they were implemented.
One of the differences between now and the recession of 1990-91 is, on the face of it, that banks are much less exposed to credit risk, thanks to the vast market in corporate debt.
He has also been scaling back on what he perceives to be risky investments, including emerging-market debt and corporate bonds.
Outside of the precious metals, high-yield corporate and local currency emerging market debt are another trade favorite that has legs even if the equity markets turn positive.
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Carol Levenson of Gimme Credit, a research service, says she has never seen such a large divergence between the view of riskiness that is outlined by bond-rating agencies and that suggested by the market price of corporate debt.
For example, India's stunted corporate-bond market might grow if banks and insurance firms were free to buy more corporate debt and less government paper.
Kohlberg Kravis Roberts , LittleJohn and HSBC (nyse: HBC - news - people ) are just three of the latest to jump into the market with new distressed-debt funds, lining up for what is expected to be a pickup in corporate bond defaults even as other veterans of the distressed-debt market complain about a lack of opportunities.
As the market value of corporate bonds sinks, we can expect debt-heavy firms to be punished through declining share prices.
JPMorgan Chase's debt-market stress tests foresaw a 40% increase in corporate spreads, but high-yield spreads in 2007-09 increased many times over.
Staples tacked on some debt to acquire Corporate Express in 2008, but the exposure to the corporate delivery market was worth the leverage, and management has been aggressive about paying down outstanding borrowings.
Selling bad loans to third parties in the market for distressed debt would help banks, but would leave the problems of the corporate sector unresolved.
Corporate debt, usually those that are ranked a notch or more below investment grade, or investment grade emerging market sovereign debt.
Corporate bonds are a fairly unique instrument in that they share characteristics from both the debt and equity side of the market.
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