Bloomberg data indicate that corporate bond issuance was quite vigorous this past week, continuing a recent trend and sending a glaring signal about the changed condition of the credit markets. The data show that companies sold $39 billion of bonds this week, the third-most ever. Two weeks ago, companies sold their most ever, a whopping $45.7 billion,
which was about double last year's average.
Reinforcing the good news evident in these numbers are the figures on high-yield-bond issuance, which Bloomberg puts at about $3.5 billion for the latest week, the best since November.
The message emanating from recent increases in bond issuance has been
reinforced by the recent tightening of credit spreads. One example, is
the KDP High-Yield Daily Index, which is comprised of 100 issues. The
yield for the index has fallen to 9.1% from a high of 10.16% on March
17. Other key spreads have tightened, including those for government-sponsored enterprises and for LIBOR.
Tony Crescenzi is the chief bond market strategist at Miller Tabak + Co., LLC, and advises many of the nation's top institutional investors on issues related to the bond market, the economy and other macro-related issues. At the request of the Federal Reserve, Crescenzi is a regular participant in the board's Livingston Survey of economic forecasters. He is also the author of the revised investment classic, The Money Market,
first published in 1978 by Marcia Stigum, and The Strategic Bond Investor. At the time of publication, Crescenzi or Miller Tabak had no positions in the securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Crescenzi also is the founder of Bondtalk.com, a popular Web site covering the bond market and the economy. Crescenzi appreciates your feedback; click here to send him an email.
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