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2016 | 2(16) | 3 | 20-31
Article title

Credit Markets and Bubbles: Is the Benign Credit Cycle Over?

Content
Title variants
Languages of publication
EN
Abstracts
EN
Bubble theories are becoming quite common these days for several asset classes, and in important growth areas of the world, like China, India and the U.S. Are we in the midst of an inflating credit bubble and, if so, when is it likely that the bubble will burst? Contrarily, are we experiencing an extended period of opportunistic debt financing? The evidence we have compiled leads us to conclude that, indeed, a bubble is building, but it is not likely to explode dramatically, with a significant increase in corporate bond and loan defaults, until at least late 2016 or more likely in 2017-2018. We believe that if not for the enormous credit stimuli by all of the major Central Banks of the world, the most recent benign credit cycle, one of over six years now, would be over, and a new stressed cycle would be starting. That is, the match (cycle) is now in “extra-time
Year
Volume
Issue
3
Pages
20-31
Physical description
Dates
published
2016-09-30
Contributors
  • Max L. Heine Professor Emeritus of Finance and Director of the Credit and Debt Markets Research Program at the NYU Salomon Center, Leonard N. Stern School of Business;, ealtman@stern.nyu.edu.
  • Credit and Debt Markets Research Specialist at the NYU Salomon Center
References
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  • Altman, E., 1989, Measuring Corporate Bond Mortality & Performance, Journal of Finance, September: 909-922.
  • Altman, E., Hotchkiss, E., 2006, Corporate Financial Distress and Bankruptcy, John Wiley & Sons.
  • Altman, E. Kuehne, B., 2013, Are High-Yield Firm Balance Sheets Stronger Today, NYU Salomon Center, May 16.
  • Altman, E., Kuehne, B., 2014, Special Commentary: A Note on Credit Market Bubbles, International Journal of Banking, Accounting and Finance, vol. 5, no. 4.
  • E. Altman and B. Kuehne, 2016, Defaults and Returns in the High-Yield Bond and Distressed Debt Market: The Year 2015 in Review and Outlook, NYU Salomon Center Special Report, February 2.
  • Altman, E., Kuehne, B., 2016, Defaults and Returns in the High-Yield Bond and Distressed Debt Market: First Quarter 2016 Review, NYU Salomon Center Special Report, May 2.
  • Khoda, N., 2016, High Yield Strategy: High Yield Credit Chartbook, Bank of America Merrill Lynch Global Research, April 1.
  • Litan, R., ed., 2011, The World in Crisis: Insights from Six Shadow Financial Regulatory Committees from Around the World, Wharton Financial Institution Center, University of Pennsylvania, Philadelphia.
  • Meyers, S., 1984, The Capital Structure Puzzle, Journal of Finance, 39, July: 581-592.
  • S&P Capital IQ LCD, 2016, Leveraged Buyout Review – 1Q16”, April.
  • S&P Capital IQ LCD, 2014, <www.lcdcomps/lcd/r/research.html>
  • Solomon, E., 1963, The Theory of Financial Management, Columbia University Press.
  • The National Bureau of Economic Research 2010, [www.nber.org/cycles.html].
Document Type
Publication order reference
Identifiers
YADDA identifier
bwmeta1.element.desklight-5ce77851-b105-4abd-a4be-c570abb09ab5
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