Down The Rabbit-Hole Of Credit Quality----The Lunacy Of The WeWork Deal

It takes two to tango (i.e, if investors are willing to accept virtually nothing in the way of a spread above risk-free govies to loan money to corporates, then it’s unrealistic to think management won’t take advantage) but you can’t expect the investment community to “show discipline” in an environment where yield is an endangered species.

The relentless chase down the quality ladder catalyzed by central banks dumping $15 trillion-ish at the top of that same ladder ensures that everything gets priced to perfection on the way down, with the sole exception of companies that are on the verge of default. Recall this schematic from Citi:



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