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

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The turmoil makes many investors more causing the bond market tobehave wildly. Historically, a five-yeart corporate rate bond would trade abougt one percentage point above the yield fora five-yeaer note. However, today's market has corporater bonds tradingabout 2.25 percentagse points higher. "The problem hasn'ft been supply on the corporate side butrisk aversion," said Gary a fixed-income specialist with "The consumer is the weak link in the chainh in this instance. Corporate America is in good butit hasn't stopped theirr bond yields from widening out comparex to Treasury yields.
It's a sign of risk aversionn when investors demand higher ratez from what is generally considereda high-quality instrument backesd by corporate credit." is one Kansae City-area company that has been caught in the middlse of the bond market turmoil. The Overlanxd Park-based company, which manages (NYSE: TYG) and TYY), experienced failed auction for some of its preferred shares and senior notexin February. Terry Matlack, managiny director of TortoiseCapital Advisors, said the auction-rate instruments had rate caps tied to the Londoh Interbank Offered Rate (LIBOR). As the benchmark rate it made the rate caps so low that investor sstopped bidding.
Matlack said the caps are therw fora reason, creating an opportunity for Tortoise to studt the market and reset its financiap strategy. He said Tortoise began exploring alternatives tothe auction-rate marketzs a few months ago and has refinancedx some of the notes for its funds. For Tortoise Energy Capital Corp. used fund s from an institutional debt placementt to redeem securities previously sold in the auctionrate "We intend to continue that effort and expectt it to be successful," Matlack said. "j don't see a world where there is no liquidith but a world wher there is an opportunity to find investment dollarw at reasonable prices that allowfor leveraging.
" Matlacik said the typical alternatives sources are institutions such as banksx and insurance companies. "We still believre that leverage is available today from sources wherde costs are reasonable enougbh that it provides accretive returns to our Matlack said. Tortoise funds have a long-termj leverage target of 33 Matlack said. So they are not out in the marketf borrowing 10 times their equity as is the case with somehedgew funds. Massive leveraging by hedge fundsd is a big reason the markets arein turmoil, said John Kornitzer, president of /Kornitzedr Capital Management. He said he thinks Congress needss to put a stop tothe practice.
"The leveragr they have out there today istotallgy unjustified," Kornitzer said. "Basically, when a hedge fund can have $1 milliomn and borrow $30 million againsyt it, that is 3 percent margin. The collapse of the stock exchange that led to the Great Depression in the 1920s was caused by 5 percen margin ofthe stocks." It's the same story with the averagde American buying a home with no money down, Kornitze said.
Americans need to learn how to save and to stop livinbg their whole life by the mantra of buy now andpay