Pony Rides with Ronnie

Observers of Ronald Reagan once commented that the former president and film legend was by his very nature so optimistic that, upon stepping in a huge pile of dung, a big smile stretched across his face. When asked why he was so happy, he responded, “with a dung heap this big, there’s sure to be a pony nearby.” That, gentle readers, is the kind of guy we need in the shipping high yield market.

Well-known fund manager Sir John Templeton once said that the time to buy is when there is blood in the streets. At a moment when bond prices have stabilized, perhaps it is time for investors to put on their Wellies, pull out their checkbooks and start consolidating their positions. On the credit ratings front, the future of shipping high yield looks pretty grim. In mid November, Golden Ocean Group had its credit rating lowered from B3 to Caa2 by Moody’s. The feeling among rating agencies is gloomy over all. In mid December, Standard & Poor’s took negative action on nine shipping companies, of which only Alpha Shipping was downgraded, from B to B-.

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