Comprising six loans on a total of 81 properties, it was the first multiple borrower bond of its kind since 2008, experts said.
The chance of losses on securitised products increases as the economy worsens; for single-borrower bonds, firm-specific factors are more important than the economic climate.
For borrowers, issuing bonds has both advantages and disadvantages compared to a bank loan.
America's financial markets met the global demand for "safe" dollar assets by repackaging the mortgages of marginal borrowers as bonds, which turned sour.
But spreads (the excess interest rate paid by risky borrowers) on corporate bonds were so high that they seemed to discount catastrophe.
Late in the 1980s an American junk-bond borrower could shout its incapacity to service its debts from the rooftops.
It was often said that the Treasury's borrowing was crowding out private borrowers from the bond market, because the federal government is not constrained by the amount of interest it is willing to pay.
These offshore yuan are, in turn, being tapped by borrowers, issuing "dim sum" bonds in Hong Kong (see article).But as the dollar's history shows, economic clout is not enough without financial sophistication (see article).
The effect is reinforced by the way regulators and global banks tend to recruit experts from each other's ranks.Moreover, rating agencies, whose main job used to be calculating the likelihood of borrowers defaulting on their bonds, now play a much bigger role: they assess the management of financial firms, and regulators have to take account of what they say.
Instead, he has relied, much as Morgan did, on collective suasion, assembling representatives of the many parties involved — mortgage lenders and servicers, investors who bought mortgage bonds, and borrowers — and pushing them toward a solution that, in theory, will leave the economy better off.
Many are now calling for a more fundamental solution to the crisis: the issue of "Eurobonds" in order to provide a fiscal underpinning to the shaky monetary union.These Eurobonds are not to be confused with their namesakes invented in the early 1960s, when bankers severed the link between currency and country of issuance by helping international borrowers sell dollar-denominated bonds in London.
