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| BondsOnline.com: instant access to and extensive coverage of over 3.5 million stocks, bonds, indexes and other securities covering major and emerging markets and exchanges across the globe. |
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| 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
|
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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Rally on Rumors Rings Hollow |
MORNINGSTAR - Oct. 3, 2011 - By Dave Sekera CFA
The markets were quick to give back rumor-fueled gains last week, but at currently heightened spreads, credit risk looks attractive from a fundamental viewpoint.
Never before have we seen the markets place so much faith in the hands of European politicians. At the start of last week, credit spreads began to tighten and the equity markets took off higher. The improvement in the markets was attributed to unsubstantiated rumors that European policymakers were close to formulating a comprehensive liquidity and recapitalization plan.
But the rumors appear to be for naught, as no formal news was released over the course of the week. By the end of the week, the credit market gave up the early-week gains and closed relatively unchanged. The Morningstar Corporate Bond Index ended the week at 250 basis points over Treasuries, 1 basis point wider than last week.
We were amazed at how much the markets had rallied on these rumors. While we fully expect that the European policymakers are working on such a plan, we were skeptical that politicians would be able to get each of the eurozone members to agree on a plan of action in such short order.
Trading volume in the credit markets was weak, perhaps suggesting that investors were not buying the hype. In fact, we heard from several sources that high-quality, short-dated corporate bonds were in demand, which suggests to us that many investors were shortening duration. We're not sure if investors are concerned that interest rates could rise or credit spreads could widen further, but either way, it had the feel that investors were looking to reduce risk.
As we have pointed out before, over the next few weeks (maybe months?) credit spreads will continue to be whipsawed by the headlines out of Europe. At these heightened levels, from a fundamental viewpoint, we think credit risk is attractive. In fact, we are beginning to find significant value in some of the more beaten-down issuers, such as those in deeply cyclical sectors.
New Issue Commentary
Bemis' New Bonds Look Relatively Cheap
On Tuesday, Bemis (ticker: BMS, rating: BBB+) announced it was offering $400 million in senior notes due 2021, with proceeds aimed at retiring its $300 million 4.875% notes due April 2012. The new unsecured bonds, priced at 258 basis points above benchmark Treasuries, will carry a coupon of 4.50%. The bonds came in about 25 basis points wide of Bemis' existing 2019s (thinly traded, but a decent-size trade was executed Monday at roughly 235 basis points above the curve), a reasonable difference thanks to a slightly longer duration and new issue concession.
For the complete article.
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Income Security Recommendation January 2013 Issue.
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