Cash to Outperform Bonds, Says Merrill

Cash to Outperform Bonds, Says Merrill

Loans

In the ongoing EM turbulence, Merrill Lynch says cash – with Libor at 5.5% – will outperform bonds and it sees opportunities to sell on strength. "At the long end, we would recommend selling bonds. However, in the intermediates, we would recommend buying protection, as it is likely to widen and the CDS-to-bond basis should also widen as the market deteriorates further," says Merrill. It compares the current turmoil to 1998, but says this time round, EM is more of a bystander, with balance sheets

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