Company Bond Sales Sink to Lowest of Year: Credit Markets
Bloomberg - April 16, 2012 - By Charles Meed
Corporate bond sales worldwide are faltering after setting a record in the first quarter as doubts about the strength of the economic recovery and Europe’s sovereign-debt crisis resurface.
From the U.S. to Europe and Asia, issuance has fallen to the lowest levels of the year in the past two weeks, according to data compiled by Bloomberg. Offerings this month of $87 billion from borrowers led by Deere & Co. (DE), the largest maker of agricultural equipment, and Royal Bank of Canada compare with a weekly average of $89.9 billion in the first three months of 2012.
Sales are dwindling even as yields on bonds have fallen almost 1 percentage point from last year’s high of more than 5 percent in October, showing reduced confidence in the global outlook among borrowers. Last week, International Monetary Fund Managing Director Christine Lagarde singled out a worsening of the European debt turmoil as the largest risk to growth, while adding that threats to the economy have diminished.
“You’ve kind of had things turn tail over the last couple of weeks,” said Thomas Chow, a money manager at Delaware Investments in Philadelphia with about $170 billion under management, of which $130 billion is invested in fixed-income assets. “The message is that we’re not out of the woods yet by any means, and that the market continues to find faults and problems with any solution to date that’s been presented.”