FT: 'Fears grow over repricing of risky debt securities'

“A repricing of risk in the credit markets is overdue and investorsface a significant challenge to embrace the wave of highly leveraged,low-rated supply that is coming their way while all around them theheadlines are pointing out the perils of lending to subprime credits ina rising rate environment,” said Louise Purtle, of CreditSights, theresearch firm. Some $15bn of high-yield debt is slated for issue in thecoming weeks while a further $70bn in bonds and more than $150bn inleveraged loan supply is expected by the end of the year.
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Meanwhile, the ABX derivative index tracking bonds backed by subprime mortgages fell to a low for a fifth consecutive day...
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WilliamO'Donnell, strategist at UBS, said investor enthusiasm for CDOs couldcome back to haunt them. “Lending-fuelled risk-seeking is in many waysa ponzi [pyramid] scheme in that is great for investors until it's not– and when it's not, the unwinds are breathtaking with their alacrity.”
(FT, 'Fears grow over repricing of risky debt securities')

(below by 5to12)
which is where i agree with denninger, i.e,
[That]We have ~$300 trillion in notional value of derivatives flying around.If even 1% of those go boom, that's a $3 trillion dollar explosion - toput this in perspective, the US GDP last year was $13 trillion dollars,give or take one. That is an absolutely huge amount of money and noamount of "pumping" by the Fed or anyone else will stave off what isgoing to happen when it detonates and the Fed knows it.'