Sacred Vedic Cows And Golden Emperor

While the Gaming Cheeks and Emperor Without Clothes are enjoying the Goldilocks, the pigs get slaughtered, according to Dow Jones Newswires:

NEW YORK (Dow Jones)--MF Global Ltd. (MF) pulled its planned $250 million offering of 10-year bonds on Tuesday, almost a week after the derivatives brokerage announced the deal with preliminary price guidance at a suggested yield between 9.75% and 10%.

Company spokeswoman Tiffany Galvin declined to give a specific reason for the move. "In keeping with our commitment to sound capital principles," she said in a statement, "we remain focused on optimizing our capital structure through those avenues which best position this company for long-term success."

MF Global, which trades in global cash and derivatives markets, is rated Baa2 by Moody's Investors Service and BBB by Standard & Poor's, both investment-grade level. Investors have recently snapped up lesser-rated debt -- even CCC-rated bonds -- in their quest for high-yielding securities.

This should be something interesting for investment grade credit as equity bulls are unstoppable and government bond yields are so low. However, according to Caja Madrid Bolsa, the Spanish member of European Securities Network, the Financial Stability Board has identified 24 banks and 6 insurance companies as "too big to let them fail". Caja Madrid Bolsa listed the "sacred Vedic cows":

1. BBVA
2. Santander
3. Goldman Sachs
4. JPMorgna Chase
5. Morgan Stanley
6. Bank of America Merrill Lynch
7. Citigroup
8. Royal Bank of Canada
9. HSBC
10. Barclays
11. Royal Bank of Scotland
12. Standard Chartered
13. UBS
14. Credit Suisse
15. Societe Generale
16. BNP Paribas
17. Mizuho
18. Sumitomo Mitsui
19. Nomura
20. Mitsubishi UFJ
21. UniCredit
22. Banca Intesa
23. Deutsche Bank
24. ING

While it is not very clear to what extent the "sacred Vedic cows" are a factor of respective sovereign risks, but, as I have noted recently here and here, the risks of mirage and banking Enrons have to be considered ...

Don't fight the trend and do not ignore the risks!