S&P 500 FINANCIALS INDEX
| Value 164.58 | Change25 1.19 | % Change 0.7% |
MLPs continue on their roll, up 2½ taking the Alerian MLP Index over 240. The index already has its best year in the 14 year history & still has 5 months to go. REITs & junk bonds are strong but the VIX, volatility index, rose 1 to 25. Bidders for high yield securities were encouraged by the last minute bailout for CIT (CIT) Group discussed below. The 10 year Treasury bond fell on the opening, but found buyers bringing its yield to little change at 3.66%.
Alerian MLP Index --- 2 weeks
Oil was little changed today.
CIT virtually doubled (to $1.33) on a $3B rescue loan negotiated late last night. The emergency loan gives the commercial lender desperately needed breathing room to refinance maturing debt amid a major liquidity squeeze. CIT had been trying to reach a deal with the gov for emergency funding before talks broke down last week. CIT, one of the nation's largest lenders to small & mid-size businesses, had warned that depriving it of more federal aid could imperil about 1M corporate borrowers -- from Dunkin' Donuts franchisees to retailer Dillards Inc. The emergency loan will provide temporary financing so CIT could launch a debt exchange offer to free itself from upcoming debt maturities. Under the deal, CIT's main bondholders would lend CIT $3B for 2½ years at an initial interest rate of 10½%.
•CIT Said to Get $3 Billion of Funds From Bondholders to Avoid Bankruptcy
California is trying to work out a last minute compromise to avert a disaster. They hope to wrap up a deal by Thurs after a Sun deadline came & went.
The last minute bailout for CIT is a welcome sign of relief for the markets, especially the high yield sectors. After one of its biggest weekly rallies, S&P 500 is at the highest level since Nov while the Dow is struggling to go into the black for 2009 (needing just another 11). Maybe buyers will return after lunch.
Dow Jones Industrials --- 2 weeks
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