This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Growing Number Of Debt Issues Funding Dividends And Buybacks Causes Concern, According To Standish





NEW YORK and LONDON, May 23, 2013 /PRNewswire/ -- Easing financing terms and the increasing number of corporate debt issues to fund special dividends and share buybacks  are two developing trends that  could negatively affect bond markets, according to the May Bond Market Observations from Standish, the Boston-based fixed income specialist for BNY Mellon.

"Both trends are detrimental to bond holders," said Thomas D. Higgins, chief economist for Standish.  "We are avoiding areas of the bond markets where we believe we are not being compensated for the associated risks."

Despite these trends, Standish notes in the May report that it does not see evidence of imminent overheating in U.S. fixed income markets, except for Treasuries.  The report also notes the benefits of liquidity created by central banks, including the lowered systemic risk and the rallies in global capital markets.

However, the report points to the diminishing effectiveness in generating real economic activity from successive rounds of quantitative easing.  "Such policies may have long-term consequences, which could increase financial instability in the future," Higgins said.

Increased liquidity may raise credit risks by compromising bank underwriting standards or discouraging necessary balance sheet repair and deleveraging as has occurred in Europe, according to the report.   It also could lead to a yield-seeking behavior by investors that can push asset prices beyond their fundamental values and create bubbles in the financial markets, the report said.

Regarding Treasuries, the Standish report notes that they are probably the most overvalued of all fixed income assets due to the quantitative easing policies of the Federal Reserve.  However, this is viewed as a byproduct of the easing policies to support economic activity, according to the report.

Notes to Editors:

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,060.51 +116.70 0.69%
S&P 500 1,977.44 +9.87 0.50%
NASDAQ 4,439.3910 +23.9010 0.54%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs