Those hoping for a unilaterally auspicious beginning to the New Year had a couple of rather large speed bumps to negotiate right off the bat. For starters, General Motors reported a fourth-quarter drop in profits by more than a third just as it began to appear that its credit rating could be cut to junk by Standard & Poor’s. By Inauguration Day, yield margins on GMAC’s 10-year paper had widened by nearly 80bp from the first week of the year, according to MarketAxess.

And Delta Air Lines certainly isn’t offering investors a respite. Delta reported a fourth-quarter loss of $2.2 billion, pushing the price on its paper due 2029 down to 40 points by the middle of January from 51 points during the first week of the year. A report from S&P said that Delta’s rating would remain at a level “indicating imminent default”.

But all will not be lost if Mark Twain’s words are kept close to heart: “There are two times in a man’s life when he should not speculate: when he can’t afford it, and when he can.”

Richard A. Bravo, Editor

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