Fridson Forecasts 25 Point Spread Narrowing

  • 13 May 2001
Email a colleague
Request a PDF

Martin Fridson, chief high yield strategist at Merrill Lynch in New York, expects high-yield spreads to treasuries to narrow 25 basis points in the event of a 50 basis point cut in short-term rates, which is expected this week. The move reflects the thinking that a cut will drive investors into junk funds in search of yield, and that low rates make it cheaper for dealers to borrow money to take on inventory, thereby improving secondary market liquidity.

But, Fridson says Merrill's model indicates spreads are already trading 34 basis points wider than they should be. This is technically "fair value," allowing for Merrill's 50 basis point margin of error, but still a solid buying climate for high yield, he adds.

  • 13 May 2001

GlobalCapital European securitization league table

Rank Lead Manager/Arranger Total Volume $m No. of Deals Share % by Volume
1 Citi 3,691 11 20.69
2 Morgan Stanley 2,420 6 13.57
3 Goldman Sachs 2,096 5 11.75
4 BNP Paribas 1,686 6 9.45
5 Barclays 1,565 4 8.77

Bookrunners of Global Structured Finance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Citi 48,566.71 153 10.76%
2 JPMorgan 41,016.11 115 9.09%
3 Wells Fargo Securities 37,344.94 107 8.27%
4 Bank of America Merrill Lynch 33,736.81 108 7.47%
5 Credit Suisse 28,660.69 86 6.35%