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What's the relative size of this market, particularly the high-risk segment in comparison to the size of the subprime mortgage segment and associated CDOs in th
by redwood 8y ago
What's the relative size of this market, particularly the high-risk segment in comparison to the size of the subprime mortgage segment and associated CDOs in the 2008 crisis?
Without a sense for whether the order of magnitude is similar, it's hard to draw conclusions on the level of systematic risk.
- ddoolin 8y agoThe article says that leveraged corporate loans make up about $1.2T. Wikipedia says the subprime mortgage market was around $1.3T in March 2007. https://en.wikipedia.org/wiki/Subprime_mortgage_crisis#Subprime_mortgage_market https://en.wikipedia.org/wiki/Subprime_mortgage_crisis#Subpr...
- redwood 8y agoWow thanks. That certainly makes things more acute! I suppose businesses are structurally different from home buyers in a number of ways: for example when a business goes bankrupt (correct me if I'm wrong) creditors are paid out to the extent they can be. Whereas when a home owner goes bankrupt I believe they can get out of their obligations entirely.