| Bonds Online |
 |
|
| 5/10/2013Market Performance |
| Municipal Bonds |
|---|
|
S&P National Bond Index
|
3.00% |
|
|
S&P California Bond Index
|
2.96% |
|
|
S&P New York Bond Index
|
3.13% |
|
|
S&P National 0-5 Year Municipal Bond Index
|
0.70% |
|
|
| S&P/BGCantor US Treasury Bond |
400.09 |
|
| More |
|
| Income Equities: |
|---|
| Preferred Stocks |
|---|
|
S&P U.S. Preferred Stock Index
|
848.03 |
|
|
S&P U.S. Preferred Stock Index (CAD)
|
636.26 |
|
|
S&P U.S. Preferred Stock Index (TR)
|
1,701.05 |
|
|
S&P U.S. Preferred Stock Index (TR) (CAD)
|
1,276.26 |
|
|
| REITs |
|---|
|
S&P REIT Index
|
174.07 |
|
|
S&P REIT Index (TR)
|
425.30 |
|
|
| MLPs |
|---|
|
S&P MLP Index
|
2,469.58 |
|
|
S&P MLP Index (TR)
|
5,428.50 |
|
|
See Data
|
|
|
|
 |
|
|
|
|
|
|
The New Bond Boom |
Forbes.com - Jan. 19, 2010 - by Matthew Craft
Companies with troubled credit histories find investors more willing than ever to hand over their cash.
In November 2006, long before the credit bubble popped, private equity firms were toppling companies with the help of bond investors happy to hand over their cash for any high yield. With $5.7 billion in debt financing for the Kohlberg Kravis Roberts-led buyout of hospital chain HCA, companies tapped the high-yield corporate bond market for $11.4 billion in the second week of that month, setting a new record.
That mark fell last week, according to Thomson Reuters, when Ford Motor ( F - news - people ), Virgin Media ( VMED - news - people ) and others raised a total of $11.7 billion in speculative-grade bonds, the riskiest form of corporate debt. The market for these high-yield bonds, commonly known as junk, has seen a flood of $14.4 billion in new sales already this month. It's the strongest start to a year since 1980, the first year of Thomson Reuters' data.
After soaring 57.5% in 2009, the market has inched 2.22% higher in January. The average price of a high-yield bond cleared 97 cents on the dollar last week. Debt analysts from Barclays ( BCS - news - people ) say the last time it reached that high was July 2007.
The USAA High-Yield Opportunities Fund (USHYX) had its best year in 2009, returning 54%. Matthew Freund, who manages the high-yield fund and other fixed-income investments, says he's still buying newly issued bonds, even though he argues the market can't climb much higher. "It's impossible to get the last 12 months' return for the next 12 months," he says. "My question is, where are you going to go?"
Freund expects prices to stay flat, which means buyers could get an 8.57% coupon payment at current prices for sitting tight. Few expect stocks, which are riskier than bonds because they're lower in the capital structure, to perform as well. "So high yield is good relative to the risk," he says.
That thinking, shared by money managers and their clients, has helped companies burnish their balance sheets. Bond funds are now flush with cash. As a result, companies with heavy debts that would have struggled in the market six months ago are finding they can sell bonds at relatively low rates and pay off more expensive obligations. Barclays estimates 95% of last week's debt sales were used for refinancing.
Take Michigan-based utility CMS Energy ( CMS - news - people ), which sold $300 million in senior unsecured notes with a 6.25% yield last week. KDP Investment Advisors expects CMS to use the cash to take out more expensive debt maturing soon--possibly the 7.75% notes due this year or the 8.5% notes due in 2011.
Buoyed by an optimistic report from Moody's ( MCO - news - people ) Investors Service, San Jose, Calif.-based Brocade Communications ( BRCD - news - people ) sold $600 million in two types of bonds: 6.62% notes, due in 2018, and 6.87%, due in 2020. The company, which makes products connecting computer networks to data-storage systems, plans to use $150 million to retire convertible notes and roughly $450 million to lower the balance on its revolving credit facility, which carries a minimum 7% interest rate.
|
|
|
|
|
|
| Partner Market Place |
|
|
|
| Stuff to look at |
Yield and Income Newsletter: A must have for income investors. subscribe NOW
S&P Commentary and Newsletters: S&P
|
|
| BondsOnline Advisor |
Income Security Recommendation January 2013 Issue.
Keep up with monthly, in-depth coverage of fixed income market strategies, commentary, and insights as seen by our sources. Sign up for the free BondsOnline Advisor now!
Unsubscribe here [+] |
|
|
|
|
