Creditflux Newsletter

It may be jostling for top spot in the English Premier League, but Manchester United is heading for the relegation zone in debt-raising.

The unrated company’s £675 million ($1 billion) bond issue last month has traded down sharply in the secondary market. It was perhaps only after they had parted with their cash that buyers realised they were lending to a massively indebted TV rights play with heavy exposure to fickle soccer fans. Traders, we hear, have taken to referring to “Man U” bonds as Manure.

Perhaps the most amusing thing about Teamster leader Jim Hoffa’s attacks on YRC Worldwide protection buyers has been watching Goldman Sachs squirm.

A spokesperson for the bank was quoted by Bloomberg as saying that Goldman Sachs does not make markets in the company’s bonds or credit default swaps. This statement was somewhat undermined by trader runs from the previous day in which, as blogger “Tyler Durden” pointed out, trader Josh Hershman offered to buy YRC five-year credit default swaps at 47 and sell at 52 points up front.

Here, courtesy of asset manager Churchill Financial’s excellent On the Left newsletter, is one explanation of credit markets’ refusal to fall very far. One trader is quoted as saying that he has been trying for weeks to get a hedge fund to take a profit on the bargain-basement auto and housing deals it bought in late 2008. “Are you kidding?” came the response. “What would we do with the cash?”

 They said it

“The CLO tranches that retained their ratings were usually part of transactions that had a combination of higher than average par coverage, better than average collateral credit quality, low Caa exposure, and lower than average exposure to non-first lien loans and/or high-yield bonds.”

Moody’s covers all the bases in explaining its CLO rating actions