Just over a week after that statement, the Fed abruptly turned course, cutting the discount rate to encourage bank borrowing to ease a growing liquidity crisis in the credit and bond markets.
Thursday, all three ratings agencies cut their ratings on Countrywide's senior debt, citing severe disturbances in the credit and bond markets that have hampered the major mortgage lender's ability to raise funding for its operations.
While the current ratings of bond insurers lend nothing to the credit standing of the bond issuer, most insured issues should still be viewed as having viable insurance backing in case of distress.
At least its pile of cash and pristine balance sheet and bond credit rating has not been affected.
On the credit front, bond markets are rallying in anticipation that the Fed may buy, which may fuel business and consumer spending.
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Mr Osborne insisted the government would stick to its deficit reduction target, "keeping our credit in the bond markets and our interest rates low".
Vicki Bryan of Gimme Credit, a bond-research firm, worries that Vanguard's shopping spree (and dividends to its shareholders) have left it with excessive borrowings.
For one thing, given how low government-bond yields and corporate credit spreads have fallen, the time of plenty in the bond market may have passed.
But those same firms have now been gripped by a choking-off of credit and stock and bond markets.
And as the bond and credit-default-swaps markets expand, the stakes will get higher.
Of late, however, credit quality in the bond market has been declining.
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Forcing bond insurers to hold exposure to credit derivatives while ceding good liabilities like municipal bond insurance would swamp their already over-leveraged capital bases, but save municipal bond investors, taxpayers and local governments from further losses, Spitzer said.
The average credit rating of a typical High Yield Corporate bond portfolio is higher than that of the Credit Suisse Leveraged Loan Index.
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Two others, Credit Suisse and Lehman Brothers, are leaving their model-bond currency allocation untouched Credit Suisse is as much in love with the dollar as ever.
This implies that a creditors primary concern is not the absolute safety of a bond or other credit instrument, but its relative safety.
Also, the dividend yield on Continental European companies is at an all-time high with 47% of the market capitalization of Europe offering a dividend yield above the respective government bond yield, Credit Suisse says.
However, the possibility of a reduction in the US Treasury credit rating would affect the bond markets, and corporate debt as well, which would be forced to pay a higher insurance premium for its debt going forward in the case of a US downgrade.
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Its famous Fico credit scores determine how much interest homeowners pay on their mortgages and whether a bond constructed from those mortgages gets a high credit rating.
"EFH's capital structure is untenable, " says Carl Blake, analyst at bond research firm Gimme Credit.
Then add the fact that since the 1970s, credit raters have been compensated by bond issuers.
Credit (a loan or a bond) is not generally acceptable as a means of payment.
Moreover, the current credit boom through trust loans and bond issuance will heighten financial risks in the economy.
But a potential problem looms in Sallie's books, says Kathleen Shanley of corporate bond research firm Gimme Credit.
Philip Adams, of bond research firm Gimme Credit, took a stab at answering the question in a research note yesterday.
Well, it matters in that a credit rating is necessary if the bond markets are to consider buying an independent Scotland's bonds.
The credibility won by such progress means Mr Osborne's plan has helped secure the country the trust of both the credit-rating agencies and the bond markets.
For years, bond insurers mainly provided credit-enhancement for municipalities.
At the same time dozens of deals like the Chrysler and Alliance Boots loans, have been postponed or canceled in the weeks since investors started getting spooked about credit quality concerns in the mortgage bond markets.
He further pointed out that some bond investors are viewing credit risk (the chances of a company defaulting on its debt) as less of a concern than interest rate risk (the chances of interest rates rising).
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