US corporate bond market issuance set to slow amid market volatility
By Matt Tracy and Davide Barbuscia
Aug 6 (Reuters) -Some corporate bond issuers are expected to delay sales this week, after market volatility caused investors to trim corporate bond holdings in favor of safer U.S. Treasuries, according to bond market participants.
Weaker-than-expected employment and manufacturing growth data last week have stoked recession fears, hitting stocks and causing investors to seek safety in U.S. government debt.
That has pushed down Treasury yields, which move inversely to prices, and caused corporate bond spreads over Treasuries to reach their widest level since January.
No investment-grade or junk bond deals priced on Monday, according to International Financing Review data, the 13th day this year without a deal outside a Friday or a holiday.
Market participants expect this week's pipeline to comprise higher-quality names which investors deem relatively safe, while riskier issuers will likely hold off until spread volatility subsides.
Utility sector issuers made up the majority of high-grade bond offerings on Tuesday, including a $300 million 10-year first mortgage bond by Connecticut Light and Power CNLPL.PK.
"The recent equity and credit market volatility won't eliminate the pipeline altogether, but it will have an impact," said Chris Forshner, head of investment grade finance at BNP Paribas.
"The issuers that will be most impacted are those that ... need a very solid backdrop from which to sell new-issue bonds."
Junk spreads - the premium investors demand to hold riskier, low-rated debt over Treasuries – rose to 393 basis points on Monday, the widest since November 2023, according to the ICE BofA U.S. High Yield Index .MERH0A0.
Spreads for high-grade corporate bonds surged to 112 basis points on Monday, their highest since December, the ICE BofA U.S. Investment Grade Corporate Bond Index .MERC0A0 showed.
The moves followed a credit market rally through most of the year,as optimism around the U.S. economy despite high interest rates sent investors hunting for yields.
Just two weeks ago, junk spreads hit their lowest level since December 2021, while high-grade spreads have also been contained this year, remaining well below 2023 levels.
Still, the corporate bond sell-off has been milder than for other risk assets such as stocks, and some investors bought back into corporate bonds on Monday after trimming exposure earlier in the year in favor of high-yielding assets.
Dan Krieter, director of fixed income strategy at BMO Capital Markets, noted on Tuesday that buying made up 54% of BMO clients' activity in the high-grade market on Monday, the highest daily share since mid-June.
"They are better value now than they were," said Andrew Jackson, head of fixed income at Vontobel. "Having taken quite a lot of risk out of our positions, we’re now adding at the margin risk on the credit side."
Reporting by Matt Tracy and Davide Barbuscia; editing by Michelle Price and Jonathan Oatis
Aset Berkaitan
Berita Terkini
Penafian: Entiti XM Group menyediakan perkhidmatan pelaksanaan sahaja dan akses ke Kemudahan Dagangan Atas Talian, yang membolehkan sesorang melihat dan/atau menggunakan kandungan yang ada di dalam atau melalui laman web, tidak bertujuan untuk mengubah atau memperluas, juga tidak mengubah atau mengembangkannya. Akses dan penggunaan tersebut tertakluk kepada: (i) Terma dan Syarat; (ii) Amaran Risiko; dan Penafian Penuh. Oleh itu, kandungan sedemikian disediakan tidak lebih dari sekadar maklumat umum. Terutamanya, perlu diketahui bahawa kandungan Kemudahan Dagangan Atas Talian bukan permintaan, atau tawaran untuk melakukan transaksi dalam pasaran kewangan. Berdagang dalam mana-mana pasaran kewangan melibatkan tahap risiko yang besar terhadap modal anda.
Semua bahan yang diterbitkan di Kemudahan Dagangan Atas Talian kami bertujuan hanya untuk tujuan pendidikan/maklumat dan tidak mengandungi – dan tidak boleh dianggap mengandungi nasihat kewangan, cukai pelaburan atau dagangan dan cadangan, atau rekod harga dagangan kami, atau tawaran, atau permintaan untuk suatu transaksi dalam sebarang instrumen kewangan atau promosi kewangan yang tidak diminta kepada anda.
Sebarang kandungan pihak ketiga serta kandungan yang disediakan oleh XM, seperti pendapat, berita, penyelidikan, analisis, harga, maklumat lain atau pautan ke laman web pihak ketiga yang terdapat dalam laman web ini disediakan berdasarkan "seadanya" sebagai ulasan pasaran umum dan bukanlah nasihat pelaburan. Sesuai dengan apa-apa kandungan yang ditafsir sebagai penyelidikan pelaburan, anda mestilah ambil perhatian dan menerima bahawa kandungan tersebut tidak bertujuan dan tidak sediakan berdasarkan keperluan undang-undang yang direka untuk mempromosikan penyelidikan pelaburan bebas dan oleh itu, ia dianggap sebagai komunikasi pemasaran di bawah peraturan dan undang-undang yang berkaitan. SIla pastikan bahawa anda telah membaca dan memahami Notifikasi mengenai Penyelidikan Pelaburan Bukan Bebas dan Amaran Risiko mengenai maklumat di atas yang boleh diakses di sini.
