| 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
|
|
|
|
 |
|
|
|
|
|
|
Junk Debt Maintains Appeal to Bond Investors: New Issue Alert |
Dec. 28, 2009 - By Gabrielle Coppola
(Bloomberg) -- U.S. corporate borrowers are marketing at least $1.36 billion of bonds as investors show more interest in high-yield, high-risk debt than in investment-grade securities.
Junk-bond yields fell to an average 9.238 percent as of Dec. 24 from 9.784 percent at the end of November, according to Merrill Lynch & Co.’s U.S. High Yield Master II index. Yields on investment-grade issues rose to 4.838 percent from 4.630 percent, Merrill Lynch’s U.S. Corporate Master index showed.
High-yield bonds produced better total returns since September as corporate defaults slow and the U.S. economy shows signs of strengthening. Junk bonds will outperform investment- grade securities in 2010, analysts led by Jeffrey Rosenberg at Bank of America Merrill Lynch in New York wrote in a report this month, because they offer more of a cushion against rising interest rates and issuers are still cutting debt.
“The perception, now that we’re exiting this recession, is the default risk for some of the issuers drops,” said Malcolm Polley, chief investment officer at Stewart Capital Advisors LLC in Indiana, Pennsylvania, which oversees about $1 billion. “People are looking for yield pretty much regardless of what the risk involved is.”
High-yield bonds may return about 10 percent next year, while investment-grade may produce a total return of 2 percent to 3 percent, according to the Bank of America Merrill Lynch report.
High-yield, or junk, bonds are rated below Baa3 by Moody’s Investors Service and BBB- by Standard & Poor’s.
Monthly Returns
The average high-yield bond has returned 2.7 percent this month including reinvested interest, up from 1.01 percent in November and bringing the year-to-date gain to 56.9 percent, Merrill Lynch data show.
Investment-grade bonds have lost 1.2 percent in December, compared with a 1.4 percent gain in November, Merrill data show. They have returned 19.5 percent in 2009.
This month, the extra yield that investors demand to own junk bonds instead of comparable-maturity Treasuries narrowed 111 basis points to 654 basis points, four times more than investment-grade spreads, which tightened 27 basis points to 194 basis points, the Merrill Lynch indexes showed. A basis point is 0.01 percentage point.
“Given that spreads are a forward-looking tool, the anticipation of better company performance is currently being priced,” analysts led by New York-based Citigroup Inc.’s John Fenn wrote in a Dec. 23 report. “To the extent earnings ultimately follow, as is usually the case, the market should be able to maintain its groove,” Fenn wrote of the high-yield sector.
Economic Data
Junk bonds outperformed investment-quality debt Dec. 24, after orders for durable goods rose and fewer Americans than anticipated filed claims for jobless benefits, showing companies are gaining confidence the economic expansion will be sustained into 2010. The junk-bond yield was unchanged while investment- grade rose 3.7 basis points.
Excluding demand for transportation equipment, which is often volatile, bookings for long-lasting goods climbed a greater-than-forecast 2 percent in November, figures from the Commerce Department showed last week. The number of workers applying for unemployment insurance dropped to the lowest level in more than a year, the Labor Department said.
Company bond sales totaled $1.24 trillion this year, up from $873.3 billion in the similar period a year ago, according to data compiled by Bloomberg. Company bond sales of $4 billion last week compare with $17.5 billion the week prior, Bloomberg data show.
Following is a description of at least $1.36 billion of pending sales of dollar-denominated bonds in the U.S.
Not Rated
SENSIENT TECHNOLOGIES CORP. said it entered into an agreement with a group of financial institutions for the issuance of $110 million in fixed-rate, senior notes, according to a Nov. 19 statement distributed by Business Wire.
(Added Nov. 20. See {SXT US <Equity> CN <GO>}.)
PT BAKRIE & BROTHERS is considering the sale of as much as $250 million of five-year bonds by January, the company said in a statement. There are no credit ratings available for the Indonesian metals producer and telecom operator, according to Bloomberg data.
(Updated Nov. 24. See {BNBR IJ <Equity> CN <GO>}.)
High Yield
BIRCH COMMUNICATIONS INC. is offering $100 million of senior secured notes due in 2015, with proceeds going toward refinancing debt, buying outstanding warrants for its common stock and general corporate purposes, including acquisitions, the Atlanta-based company said Nov. 30 in a statement. Birch is rated B- by S&P, the ratings company wrote Dec. 4 in a statement.
(Updated Dec. 21. See www.birch.com/about/)
PT CILIANDRA PERKASA, an Indonesian oil palm grower, may sell dollar bonds, a person familiar with the matter said. Ciliandra is a unit of Singapore-based First Resources Ltd.
(Added Nov. 16. See {1754889Z IJ <Equity> CN <GO>}.)
PT CHANDRA ASRI, the Indonesian petrochemical company, plans to raise as much as $250 million from the sale of five- year bonds, according to two people with knowledge of the deal. DBS Group Holdings Ltd. and Deutsche Bank AG are arranging the sale. Standard & Poor’s assigned a B+ rating to the senior secured notes, which will be issued by Chandra Asri’s wholly owned Altus Capital Ltd. unit. Moody’s assigned them a provisional rating of B2. Chandra Asri is considering the dollar bond sale to fund expansion, according to Agustino Sudjono, the corporate secretary at parent company PT Bariot Pacific.
(Updated Dec. 22 See {1104Z IJ <EQUITY> CN <GO>}.)
PT MEDCO ENERGI INTERNASIONAL plans to sell $300 million of bonds, Bisnis Indonesia reported, citing unnamed people. Indonesia’s largest publicly traded oil company, which is rated B at S&P, has invited banks to bid to manage the bond sale.
(Added Oct. 26. See {MEDC IJ <Equity> CN <GO>}.)
AO ASTANA FINANCE will offer senior creditors $350 million of new bonds, as well as recovery notes and 58.9 percent of voting shares, the lender said in a statement published through the Kazakhstan Stock Exchange. Holders of Astana Finance’s domestic notes will be offered 20-year tenge-denominated bonds with an 8 percent coupon, the lender said in the statement, which was dated Oct. 16.
(Added Oct. 20. See {ASFI KZ <Equity> CN <GO>}.)
The DOMINICAN REPUBLIC may sell as much as $600 million of bonds, said Roberto Cabanas, head of general financing at the Public Credit Office. The government hired Barclays Plc and Citigroup Inc. to arrange the country’s first international dollar bond sale in more than three years. The country is rated B2 by Moody’s and B by S&P.
(Added Oct. 9. See {TNI DOMREP NEWBON <GO>})
VIETNAM may sell its first overseas bond since 2005 in a $1 billion offering as soon as next month, according to a government official.
(Updated Dec. 3. See {EI0358982 <CORP> DES <GO>})
Offerings in Pipeline
VIETNAM SHIPBUILDING INDUSTRY GROUP, the state-owned company known as Vinashin, won government approval to sell as much as $600 million of bonds overseas to fund construction of ships. Vinashin plans to raise between $400 million and $600 million in a dollar-denominated bond sale, “hopefully within the first quarter next year and with a government guarantee,” Chief Business Officer Nguyen Quoc Anh said in a phone interview from the northern port province of Quang Ninh.
(Added Dec. 22. See {1052857Z VN <Equity> CN <GO>}.)
The POLISH government may sell dollar-denominated bonds in the first quarter of next year, PAP newswire cited Deputy Finance Minister Dominik Radziwill as saying. Poland may sell bonds denominated in euros as early as January 2010, PAP cited Radziwill as saying.
(Added Dec. 16. See {1084Z PW <Equity> CN <GO>}.)
ANGOLA, which vies with Nigeria as Africa’s biggest oil producer, is seeking to raise $4 billion from a sale of bonds. The debt will be sold in two parts in December and in June 2010, according to John Coulter, chief executive officer of JPMorgan Chase & Co.’s South African unit, which is managing the deal. Angola will seek a credit rating after the first portion is sold, Finance Minister Eduardo Severim de Morais said Dec. 14.
(Updated Dec. 15. See {NI ANGOLA BN <GO>})
MICHAELS STORES INC., the world’s largest arts-and-crafts retailer, amended its credit agreement on Aug. 21 to allow the private equity-owned company to issue bonds to repay its existing term loan under a $2.4 billion facility with Deutsche Bank AG and other lenders.
(Updated Oct. 27. See {MIK US <Equity> CN <GO>}.)
The PHILIPPINES may sell most of its $2 billion overseas bond planned for 2010 in the first quarter, before the May elections, Finance Secretary Gary Teves said. The country is rated Ba3 at Moody’s and BB- at S&P.
(Added Nov. 10. See {TNI PHIL NEWBON <GO>})
INDONESIA may sell $750 million of dollar-denominated Islamic bonds in July 2010, Dahlan Siamat, director of Islamic financing policy at the nation’s Debt Management Office, said in Jakarta on Dec. 15. The nation is rated Ba2 by Moody’s and BB-by S&P.
(Updated Dec. 15. See {TNI INDONESIA NEWBON <GO>})
ALROSA, Russia’s diamond monopoly, may sell as much as $1 billion in foreign-currency bonds in the second half of next year, RIA Novosti reported, citing Chief Executive Officer Fyodor Andreyev. The company is rated Ba3 by Moody’s.
(Added Sept. 29. See {1018Z RU <Equity> CN <GO>}.)
--With assistance from Timothy R. Homan and Courtney Schlisserman in Washington, and Sapna Maheshwari and John Detrixhe in New York. Editors: Mitchell Martin, Alan Goldstein
To contact the reporter on this story: Gabrielle Coppola in New York at +1-212-617-1217 or gcoppola@bloomberg.net
To contact the editor responsible for this story: Alan Goldstein at +1-212-617-6186 or agoldstein5@bloomberg.net
|
|
|
|
|
|
| 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 [+] |
|
|
|
|
