Housing Collapse Erased in Homebuilder Bonds
Another bubble may be forming in the U.S. housing market, this time in the bonds of homebuilders.
Not since July 2007, before the subprime mortgage market collapsed and credit markets froze, have investors accepted relative yields as low as they are now for debt of the nation’s biggest homebuilders.
Spreads at 4.82 percentage points on debt of borrowers from D.R. Horton to Toll Brothers have tightened nine times faster than the overall high-yield market since February, BAML index show.