The commitment we make to a full partnership is to continue to respect each other and honor the partnership as a special relationship. The evolving partnership has a life of its own and requires all of the same life-sustaining efforts and energies as any other enterprise. The special power of the partnership derives from the fact that it is created by design, sustained by conscious diligence, and flourishes as a result of renewed commitment by the partners. Following are the key components of making a partnership work.

Active support of leaders. Appropriate team membership with equal participation. Common objectives. Clear boundaries and scope. Consensus and openness. Trust and mutual benefits.

Industrial production (IP) is another lagging indicator. Arobust relationship between high-yield spreads and industrial production is found at 0.76 with a 5–6 month lag. This means that a spread tightening in the high-yield market will induce an improvement in industrial production in a couple of months and give high-yield investors some comfort that spreads will be supported further in the future by better macroeconomic data like industrial production.

Industrial production is compared with default rates. A better IP is associated with increased profitability and cash flow situation of companies. This implies a better access to the capital markets and therefore lowers liquidity risk. As a result default rates will fall when IP rises and this translates directly into tighter spreads.

A robust negative correlation of around 0.75 exists between Moody’s trailing 12-month issuer-based default rate and the US year-over-year production for the period 1988–2003.