Wall St. fears cause local frustrations: Tortoise seeks new avenues for funding - Kansas City Business Journal:

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The turmoil makes many investorsmore cautious, causing the bond markef to behave wildly. Historically, a five-year corporatd rate bond would trade abour one percentage point above the yield fora five-year note. today's market has corporate bonds tradingabouty 2.25 percentage points higher. "The problenm hasn't been supply on the corporate side but risk saidGary Cloud, a fixed-income specialisr with "The consumer is the weak link in the chaib in this instance. Corporate Americaq is in good shape, but it hasn'y stopped their bond yields from wideningg out compared toTreasury yields.
It'zs a sign of risk aversiobn when investors demand higher ratesw from what is generally consideredca high-quality instrument backed by corporate is one Kansas City-area company that has been caughf in the middle of the bond marke t turmoil. The Overland Park-based which manages (NYSE: TYG) and (NYSE: experienced failed auctions for some of its preferred sharesd and senior notesin February. Terry Matlack, managinyg director of TortoiseCapital Advisors, said the auction-ratw instruments had rate caps tied to the London Interbank Offered Rate (LIBOR). As the benchmarok rate dropped, it made the rate caps so low that investorxsstopped bidding.
Matlack said the caps are therer fora reason, creating an opportunity for Tortoisd to study the market and reset its financiak strategy. He said Tortoise begaj exploring alternatives tothe auction-ratee markets a few months ago and has refinanced some of the noteds for its funds. For example, Tortoise Energy Capita Corp. used funds from an institutional debt placement to redeen securities previously sold in the auctiomrate market. "We intend to continue that effort and expect it to be Matlack said.
"I don't see a worlc where there is no liquidity but a world wherre there is an opportunity to find investment dollards at reasonable prices that allow for Matlack said the typical alternativ sources are institutions such as banks andinsurance companies. "Wde still believe that leverage is availablwe today from sources where cost s are reasonable enough that it provides accretive returnw toour shareholders," Matlack said. Tortoise funds have a long-termk leverage target of 33 Matlack said. So they are not out in the marker borrowing 10 times theirequituy base, as is the case with some hedgee funds.
Massive leveraging by hedgew funds is a big reason the markets are in saidJohn Kornitzer, president of /Kornitzer Capital He said he thinks Congresss needs to put a stop to the practice. "Thd leverage they have out there today istotally unjustified," Kornitzeer said. "Basically, when a hedge fund can have $1 milliomn and borrow $30 million against it, that is 3 percent margin. The collapse of the stocko exchange that led to the Great Depression in the 1920s was causex by 5 percent margimn ofthe stocks." It's the same storyg with the average American buying a home with no monet down, Kornitzer said.
Americans need to learn how to save and to stop livinbg their whole life by the mantra of buy now andpay