Informa Global Markets' poll of analysts indicated companies will sell more than $100 billion in bonds this month. That will be highly dependent on how much debt banks issue under the Federal Deposit Insurance Corp's program that lends a government guarantee on their short-term debt.
In April, companies sold $101.29 billion, according to Informa. That includes Build America Bonds, taxable debt sold by municipalities and public agencies under the federally-subsidized program that was part of the economic stimulus package earlier this year.
Corporate debt yields 4.81 percentage points more than Treasurys, according to Merrill Lynch. That's down from a high of 6% in late March, but still more than they have before last autumn.
Corporate bonds returned 3.08% in April, the first positive month this year, according to Bank of America-Merrill Lynch, whose bond indexes are benchmarks for many fixed-income investors.
By comparison, Treasury lost 1.90% last month.
High-yield bonds returned 11.5% last month, as signs appeared that the depths of the recession may be past, which encouraged investors to take on more risky assets, including bonds with below-investment grade ratings. That's a record return for the sector, according to the Bank of America-Merrill Lynch.
"Stabilizing earnings and some stability in economic data leading to improved consumer confidence fueled a down-in-quality trade in April and large returns in higher-yielding asset classes," credit strategists at wrote in a research note released Monday.
Still, further improvement will likely depend on government intervention than fundamental strength, they said, leaving analysts defensive and more amenable to higher-grade credits.
Commercial mortgage-backed securities, or CMBS rated AAA, returned 13.2% last month, the firm said. Those gains stemmed from the government including the debt in its Term Asset-backed Securities Loan Facility. On Friday, the government limited which CMBS would be accepted.
Analysts elsewhere have said CMBS may be the next shoe to fall as retail stores and business offices close, hurting the shopping-mall and office real estate markets.
Deborah Levine is a MarketWatch reporter, based in New York.
