The spreads, or gap of U.K. government debt over similar German debt has widened less than the spread of French debt over German paper.
After the markets closed Monday, Fitch Ratings downgraded AIG's long-term and short-term issuer default rating, as well as its senior unsecured debt and commercial paper program ratings.
On Tuesday the U.S. central bank said it would begin purchasing the short-term corporate debt known as commercial paper from American issuers.
On Tuesday the Federal Reserve said it would begin purchasing the short-term corporate debt known as commercial paper from American issuers.
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.
In recent months the company has raced to reduce its reliance on short-term debt, particularly commercial paper that it could no longer place in the market.
Russian companies in particular have benefited from this increased demand for higher-yielding paper with debt sales up more than 200% this year compared with the same period in 2012, according to Dealogic.
This market has burgeoned as increasingly debt-laden companies sell paper at a 13-14% discount to face value in an effort to stay afloat.
Major European banks probably need a 500 billion euro transfusion to write down their debt holdings of weak sister paper from Spain, Italy and Greece.
Who are the investors that are being suckered into to buying debt that is barely worth the paper it is printed on?
It is worth recalling in the context of the current volatility that the European Commission published a follow up discussion paper on the proposed debt write-down tool in March 2012.
Economists Carmen Reinhart and Ken Rogoff triggered a vigorous round of naysaying earlier this year when they released a paper suggesting a government debt-to-gross domestic product ratio of 90% is a magic threshold beyond which debt can stifle economic growth.
The costs of issuing commercial paper, a form of short-term debt heavily used by companies in America, will fall once a Fed facility for purchasing commercial paper is up and running on October 27th.
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There are already, after all, limits on how much commercial paper and other forms of debt fund-management firms can buy from other members of their group.
But on paper Ben Bernanke, cheap debt, and a rising stock market have rescued private equity from suffering a complete disaster from the buyout boom of 2005 to 2008, when private equity firms raised and invested unprecedented sums of cash.
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Look at the chart below, again from GMO in a paper by Edward Chancellor on sovereign debt.
The paper concluded that advanced economies with debt in excess of 90% of their Gross Domestic Product suffer a diminution of economic growth.
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Carmen Reinhart and Kenneth Rogoff's paper Growth in a time of debt looked at 20 advanced economies since 1945 and found that GDP growth had been between 3% and 4% when debt had been below 90% of GDP, but that the average had collapsed to -0.1% when debt had risen above 90%.
In a new paper, with the racy title Debt and Deleveraging: uneven progress on the path to growth, McKinsey asserts that the task of reducing the indebtedness of consumer-led economies such as the UK and Spain is barely underway (and see my earlier post, UK's debts biggest in the world, for more on this).
That debt will never be repaid except via printing more paper.
At the annual meeting of the American Economic Association, Professor Carmen Reinhart and the former chief economist of the International Monetary Fund, Ken Rogoff, are presenting a research paper called Growth in a Time of Debt.
This morning, Italian two-year government debt yields 145 basis points over German two-year paper.
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To be sure, safety-seekers who jumped into Treasury debt have been well-rewarded for their plunge into paper that pays the risk-free rate.
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Dr. Woody Brock has written a very important paper on why a country cannot grow government debt well above nominal GDP without causing severe disruptions to the overall economic system.
The French hold 75 billion euros of Greek debt and 220 billion euros of Spanish debt while the Germans have 45 billion euros of Greek Paper and 238 billion euros of Spanish paper.
For example, repeat borrowers in August on average had new debt pricing roughly 35 bps higher than where comparable existing paper was trading pre-announcement, compared to average premiums of 43 bps and 50 bps for deals priced in the first and second quarters, respectively, according to LCD.
Already, the relative scarcity of Treasury paper has widened the yield spread between Treasurys and other debt instruments like agencies, mortgages and corporates.
Burned on Lehman debt, many money-market mutual funds have also stopped buying commercial paper.
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