Corporate bond issuance has been above normal thus far this week, one of a
number of signs indicating that some semblance of normalcy has returned to
the credit markets.
The issuance pipeline remains very heavy, however, and
the credit markets will be tested a great deal in September, when bond
issuance tends to pick up after a summer lull.
This year's pipeline of
expected issuance is larger than normal because of the large amount of
bridge loans that were deployed during the surge in announcements of mergers
and acquisitions. Hence, these positive signs could easily evaporate if
issuers try to tap the markets and find too few takers. Moreover, any bond
issuance must be put in the context of evaporating sources of funding
elsewhere.
From Monday through yesterday, the total amount of corporate bond issuance
was roughly $14.4 billion, according to Bloomberg data, roughly $2 billion
above normal for a three-day period compared with the rest of the year. Today's
calendar is again busy, with issuance probably running as high as $5 billion
or more.
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Tony Crescenzi Blog Commercial Paper Tally Plunges Again 8/23/2007 11:02 AM EDT The shrinkage of the commercial paper market will force companies to obtain money elsewhere.
Tony Crescenzi Blog Mild Worsening of Jobless Claims 8/23/2007 8:58 AM EDT The numbers may be hinting at a deterioration in labor demand.
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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