I do a lot of reading to try to stay on top of things – both news, as well as a number of blogs and other analysis sites. Many have been commenting on the distress in the bond markets on a number of fronts – long swap spreads, investment-grade corporates, and now highly-rated commercial mortgage-backed securities. The rapid blowout in CMBS spreads has hit lower rated tranches already, and the relative stability of the AAAs has probably led to some people being caught by surprise.

And as would be expected, the LCDX index referencing credit default swaps on leveraged loans has gone parabolic in an even more extreme way.

And the CDX index referencing CDS on investment-grade corporates touched another high.

Now, the stock market jumped going into the close Friday, but I’m still generally averse to buying stocks. There are many stocks trading at or below levels I didn’t anticipate seeing, but I’d rather keep the cash for the time being. Most of my searching for investment opportunities lately seems to focus on high-yielding alternate asset exposure, as well as distressed corporate debt. Until investment-grade corporate spreads start to tighten, I imagine that will continue to be true.

My primary position continues to be Primus debt (PRD), which has actually been rallying in the midst of all this credit market distress. I believe they’ve been very aggressive in buying back their debt – possibly accounting for about 28% of volume from the announcement of the program through the end of October – which would be a good explanation for this divergence.

All of this serves as a backdrop to what is shaping up to be a bailout/restructuring/capital injection at Citigroup (C) – a crisis being dealt with in a quieter manner than what happened in September, although possibly more significant because of Citi’s size.