Credit Crisis II

We covered this before by taking 10 years notes to yields as an example, And there is warning from main line media about this Previous post

NEW YORK (Reuters) - The global financial crisis may morph into a second, equally virulent phase where borrowing costs rise again, hobbling an embryonic economic recovery, debilitating cash-strapped banks, and punishing investors all over again.

Early warnings signs of this scenario include surging government bond yields, a slumping U.S. dollar, and the fading of the bear market rally in U.S. stocks.

Optimists hope that a fragile two-month rally in world stock markets, a rise in U.S. Treasury yields from record lows during the depths of the crisis in late 2008, and some less scary economic data all signal that a recovery is around the corner.

But gloomy analysts insist that thinking is delusional.Full Story

Yellow Pages Bankruptcy

R.H. Donnelley files Ch. 11

The Associated Press
8:21 AM CDT, May 29, 2009

Yellow pages publisher R.H. Donnelley Corp., which has been struggling to service its debt as the recession slashes its revenue, said Friday it voluntarily filed to reorganize under Chapter 11 bankruptcy law.

Donnelley, which was formed in 1916 as an offshoot of Chicago?s R.R. Donnelley, is now a completely separate company based in Cary, N.C. But it has operations in the Loop, Arlington Heights, Tinley Park and six other Illinois locations. R.R. Donnelley, the world?s largest printing company, still publishes many of R.H. Donnelley?s directories.

As of Dec. 31, 2008, the company had $11.88 billion in assets and $12.37 billion in liabilities, spokesman Tom Becker said.

The company missed a $55 million payment on April 15 and a $78 million payment due May 15. But creditors extended R.H. Donnelley's payment deadline to Thursday.Full story

Commercial Property Debt Fears

New debt fears over commercial property

By Aline van Duyn in New York

Published: May 28 2009 23:39 | Last updated: May 28 2009 23:39

Fears among credit investors have risen that threatened ratings downgrades of commercial property debt might thwart US government efforts to revive the markets that help fund office blocks, shopping centres and other commercial real estate.

Standard & Poor’s warned this week that it was likely to downgrade tens of billions of dollars in triple A securities backed by recent real estate loans – with 90 per cent of the securities backed by 2007 mortgages likely to face rating cuts.

The move took the market by surprise and triggered a sharp fall in the value of triple A rated commercial mortgage-backed securities. The ratings are important because the Federal Reserve said last week that its $1,000bn term asset-backed securities loan facility (Talf) could only be used in the CMBS market for securities that are rated triple A.

Talf represents a crucial policy response to the collapse of markets for securities backed by commercial mortgages and other loans. Borrowing costs for commercial properties had come down in recent weeks on hopes Talf would help revive the market, which tends to determine the interest rates available on new commercial mortgages. Full Story