Corporate debt in general, but also Corporate Bonds, and Corporate Bond Derivatives, are in turmoil now for several big reasons, where, of course, it is the uncertainties of not only the impossibility of knowing, at this early point, just how much initial, chaos might continue, because so many nations are only still discovering that that have a curve to flatten at all, let alone what they will need to do to get it flattened; even beyond that is there also the uncertainties of what the very need of Capitalists, to always find another way to make money off something that has become too staid, or lackluster, in ability to provide profit; what that does to keep them creating more uncertainties for themselves. And in that case, now that the Fed has made the commodity of money itself virtually free, and thus not so conducive for returns maximization, what is a good Capitalist to do? Well add a new level of abstraction to an already existing commodity, and then trade in that. That's why futures trading exists in the first place, you know, for almost anything.
Back before 2008, of course, it was the wonderfully obfuscating euphemism, that they called derivatives, that packaged mostly bad stuff, with a little good stuff, in the context of home mortgage loans, that was dreamed up. And we know where that went.
There are protections now, in place, to protect against too much of that kind of speculation, for ordinary people, bank borrowing. For the big business sorts of borrowing, though, not so much. And so a lot of not so profitable companies have been able to keep going because they've been able to tap into more speculative oriented lenders, willing, supposedly, to take on more risk, precisely in order to get a higher commodity price for that commodity called money. And because that's been going on for a while, naturally people would create new, packaged investment instruments with which institutional investors get tempted into adding to their portfolios because its just too damn easy.
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