Corporate Bonds Article

Junk Bond Sales Soar as Returns Top U.S. Market: Canada Credit

http://www.businessweek.com/news/2010-10-15/junk-bond-sales-soar-as-returns-top-u-s-market-canada-credit.html

Companies sold a record amount of high-yield bonds in Canada this year, taking advantage of investor demand for alternatives to low-yielding government bonds. Analysts say that it is a sign of an increased role of the capital markets for firms to borrow money rather than go to banks or to the U.S. market.

Canadian high-yield corporate debt, reflecting a global search for yield, has returned almost 20% this year. That compares with a 14% total return for comparable debt in the U.S. Given the turn in the business cycle, which is considered by experts real and sustainable, high yield bonds are expected to be very attractive with high returns.

Increased demand for high-yield bond means fewer Canadian firms may sell their bonds in U.S. dollars. This is a sign of the increasing maturity of financial markets outside the U.S.

U.S. Corporate Debt Sales Fall for Third Straight Week

http://www.bloomberg.com/news/2010-10-08/corporate-debt-sales-fall-for-third-week-despite-reynolds-issue.html

Bloomberg data shows that issuance this week fell short of the 2010 average of $22.2 billion,. Investment-grade issuers accounted for $12.1 billion of sales, and high-yield offerings were $9.53 billion. Companies issued $160.6 billion of debt in the U.S. corporate bond market in September, the second-busiest month on record.

Corporate bond issuance was the lowest in a month even as borrowing costs for investment-grade companies tumbled to the least on record, according to Bank of America Merrill Lynch index data. Celgene, the maker of blood-cancer drugs, sold $500 million of five-year notes with a 2.45 percent coupon, the lowest for that maturity from a BBB issuer.

Corporate earnings are expected to be very high across the U.S. Companies have had the best excuse ever to streamline their operations. Firms...