| Bonds Online |
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| 5/10/2013Market Performance |
| Municipal Bonds |
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S&P National Bond Index
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3.00% |
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S&P California Bond Index
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2.96% |
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S&P New York Bond Index
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3.13% |
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S&P National 0-5 Year Municipal Bond Index
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0.70% |
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| S&P/BGCantor US Treasury Bond |
400.09 |
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| Income Equities: |
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| Preferred Stocks |
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S&P U.S. Preferred Stock Index
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848.03 |
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S&P U.S. Preferred Stock Index (CAD)
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636.26 |
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S&P U.S. Preferred Stock Index (TR)
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1,701.05 |
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S&P U.S. Preferred Stock Index (TR) (CAD)
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1,276.26 |
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| REITs |
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S&P REIT Index
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174.07 |
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S&P REIT Index (TR)
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425.30 |
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| MLPs |
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S&P MLP Index
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2,469.58 |
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S&P MLP Index (TR)
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5,428.50 |
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See Data
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U.S. Corporate Bond Sales Fall on Sustained Europe Debt Concern |
Bloomberg - June 4, 2010 - By Sapna Maheshwari
Sales of U.S. corporate bonds fell 53 percent this week and issuance of high-yield company debt halted on sustained concern that the sovereign debt crisis in Europe may slow global economic growth.
Bank of Montreal, Canada’s fourth-largest bank, sold $2 billion of covered bonds to lead $5.15 billion of corporate debt offerings. Consolidated Edison Inc., owner of New York City’s largest utility, issued $700 million of debt in its first offering this year, according to data compiled by Bloomberg.
Overall sales declined to the third-lowest this year as the European Central Bank forecast that financial institutions will have to write off 195 billion euros ($237 billion) of bad debts by 2011, according to a report published May 31. Borrowers are waiting for markets to stabilize before selling bonds, said Leslie Barbi, a fixed-income managing director at Guardian Life Insurance Co. of America.
“People are trying to get some confidence that there’s no big event coming, and as soon as they feel things are stable, they’ll probably be willing to forge ahead,” said Barbi, who helps oversee $23 billion in fixed-income assets. Issuers “realized investors were nervous, so if they tried to come, they might have to make a bigger concession, or they were worried a bigger announcement might disrupt the markets and they didn’t want to be subject to being out there.”
The extra yield investors demand to own investment-grade corporate debt instead of Treasuries rose 3 basis points to 205 basis points after touching 207 basis points, the highest since Dec. 11, according to the Bank of America Merrill Lynch U.S. Corporate Master Index. Absolute yields rose to 4.64 percent from 4.54 percent. A basis point is 0.01 percentage point.
‘European Sovereign Crisis’
“May was the first month where concerns over the European sovereign crisis had a major adverse effect on U.S. risk assets,” Bank of America Corp. credit strategists led by Hans Mikkelsen wrote in a June 1 research note. Investment-grade corporate bond losses were driven by financials “as contagion from the European sovereign crisis is transmitted through the global banking sector, as well as uncertainty around financial regulatory reform.”
Spreads on high-yield, high-risk bonds widened 3 basis points to 693 basis points, Bank of America Merrill Lynch index data show. They have expanded 151 basis points since touching 542 on April 26, the data show. Yields rose to 9.3 percent from 9.17 percent. High-yield bonds are rated below Baa3 by Moody’s Investors Service and BBB- by Standard & Poor’s.
High-yield bond sales froze for the first time since the week ended Jan. 1, as investors avoided riskier assets. Issuers sold only $6.8 billion of the securities in May, an 80 percent decline from April, and 83 percent drop from March.
‘Remain Soft’
“In June, we expect primary market conditions to remain soft as prolonged sovereign risk and contagion fears will extend volatility in U.S. markets,” Bank of America high-yield strategists Oleg Melentyev and Mike Cho told investors in the June 1 note.
This week’s corporate bond sales compare with $10.9 billion during the period ended May 28 and a 2010 average of $20.9 billion, Bloomberg data show.
The euro fell to the lowest against the dollar since April 2006 as investors await signs that the European Union’s almost $1 trillion rescue package last month will halt the continent’s sovereign debt crisis. The Frankfurt-based ECB, which launched a bond purchase program last month, said its ability to sell debt may be hampered as governments seek to finance fiscal deficits.
Treasuries, Dollar
Yields on the 10-year U.S. Treasury bond, the market bellwether, rose to 3.36 percent from 3.29 percent, and the Dollar Index jumped 0.8 percent. The index tracks the greenback against the currencies of six major U.S. trading partners.
Corporate bond buyers expect $60 billion to $80 billion of investment-grade debt issuance in June, Guardian Life’s Barbi said. In the absence of more bad news, and as issuers and buyers gain confidence, that will happen, she said.
A report yesterday showed service industries expanded in May for a fifth straight month, indicating the U.S. recovery is broadening. The U.S. Labor Department’s monthly jobs report today may show that payrolls climbed by 523,000 in May, the fifth straight month of gains and the biggest since 1983, according the median forecast.
Bank of Montreal sold covered bonds due 2015 in the first U.S. dollar sale of such securities since Bayerische Landesbank sold $200 million of the debt on April 26, Bloomberg data show.
Covered bonds are typically backed by mortgages or public- sector loans. The collateral underlying the debt remains with the borrower, which also guarantees the bonds.
Con Ed Boosts Sale
Consolidated Edison sold $350 million of 10-year notes and $350 million of 30-year debt, Bloomberg data show. The utility boosted the size of the offering by $100 million, according to a person familiar with the transaction who declined to be identified because the marketing was private.
Transunion LLC, a provider of credit information to banks and consumers, plans to sell $645 million of notes due in 2018 as early as next week, according to Moody’s Investors Service and Standard & Poor’s. Proceeds from the sale will help pay for Madison Dearborn Partners LLC’s acquisition of a 51 percent stake in the company, S&P said.
--With assistance from Craig Trudell and Tim Catts in New York. Editors: Mitchell Martin, Cecile Gutscher
To contact the reporter on this story: Sapna Maheshwari at sapnam@bloomberg.net.
To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net.
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