| 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
|
0.70% |
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| S&P/BGCantor US Treasury Bond |
400.09 |
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| More |
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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)
|
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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Goldman Sachs Says Don't Be Afraid as Bonds Trade Over Par: Credit Markets |
Bloomberg - Aug. 11, 2010 - by Shannon D. Harrington
The highest corporate bond prices in more than six years show investors reconsidering an aversion to buying debt trading above face value as the Federal Reserve is compelled to take more steps to boost a slowing recovery.
The average investment-grade bond price has jumped about 4.5 cents to more than 110 cents on the dollar in the past two months as yields fell 73.5 basis points to 3.929 percent, according to Bank of America Merrill Lynch index data.
With short-term interest rates near zero and the pace of an economic recovery slowing, investors may drive prices higher as they turn to credit markets to bolster yields, said Alberto Gallo, a strategist at Goldman Sachs Group Inc., the U.S. bank that makes the most revenue from fixed-income trading.
“Even if prices look high, the current search-for-yield environment may drive them even higher,” Gallo said yesterday in a telephone interview from New York. “Investors have been worried about high prices because buying bonds trading substantially above par exposes them to more losses if spreads widen. When you put more capital to work, your level of risk increases as well.”
Fed officials said yesterday that a “more modest” recovery than anticipated is prompting them to retain a commitment to keep their benchmark interest rate close to zero for “an extended period.” The central bank will maintain holdings of securities to prevent money from being drained out of the financial system it helped prop up after the credit seizure in 2008. The Fed will reinvest principal payments on its mortgage holdings into long-term Treasury securities.
Swaps Rise
Elsewhere in credit markets, the rate that banks say they charge for three-month loans in dollars in London fell the most in almost a year. The London interbank offered rate, or Libor, for such loans dropped 1.3 basis points, or 0.013 percentage point, to 0.384 percent, the British Bankers’ Association said.
The extra yield investors demand to own company bonds instead of government debt was unchanged at 175 basis points, or 1.75 percentage points, according to Bank of America Merrill Lynch’s Global Broad Market Corporate Index. The spread has narrowed 26 basis points since June 11. Average yields fell to 3.643 percent from 3.654 percent.
The cost of protecting corporate debt in the U.S. from default rose to the highest in three weeks. The Markit CDX North America Investment Grade Index, which investors use to hedge against losses on corporate debt or speculate on creditworthiness, increased 3.7 basis points to a mid-price of 108.4 basis points as of 11:50 a.m. in New York, the highest since July 21, according to Markit Group Ltd. In London, the Markit iTraxx Europe Index of 125 companies with investment- grade ratings increased 6 basis points, the most since June 29, to 111.7.
AIG Unit
The indexes typically rise as investor confidence deteriorates and fall as it improves. Credit-default swaps pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt. A basis point equals $1,000 annually on a contract protecting $10 million of debt.
American International Group Inc.’s plane-leasing unit boosted a debt offering to $4.4 billion of secured and unsecured notes as it seeks to repay a portion of loans from the bailed- out insurer.
International Lease Finance Corp. plans to sell $1.35 billion of four-year debt, and $1.275 billion each of six-and eight-year notes, all senior secured, according to a person familiar with the transaction. ILFC also plans to issue $500 million of senior unsecured seven-year notes, it said today in a statement distributed by Business Wire.
Face Value
Proceeds will repay a portion of outstanding secured loans from AIG Funding Inc., a financing division, according to company statements. AIG Chief Executive Officer Robert Benmosche is seeking to manage debt of the units, as AIG looks to repay a 2008 government rescue that swelled to $182.3 billion. The insurer said today it’s selling a majority stake in its American General Finance Inc. consumer lending unit, with more than $17 billion of debt, to Fortress Investment Group LLC at a loss.
For the complete article visit Bloomberg.
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