Credit Markets: New Bond Sales Set Fast Pace In January -- WSJ
January 25 2020 - 3:02AM
Dow Jones News
By Matt Wirz
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (January 25, 2020).
Corporate bond prices pushed higher Friday, extending a rally
that has spurred a wave of issuance by companies of all kinds.
New bond sales by U.S. high-yield and investment-grade companies
are on track for one of their biggest Januarys in years. Bond
issuance is typically heavy at the start of the year, when
corporations rush the market to raise as much of their annual
financing targets as possible, but the wave of deals this year is
unusually heavy, according to data from Dealogic.
Sales of high-yield bonds are on pace for the strongest January
of the decade, with new issuance through Jan. 23 amounting to $29.4
billion. That exceeds all full-month January totals over the past
10 years except 2013, when issuance was $30.2 billion, according to
MarketAxess.
Investment-grade corporate bond issuance has reached $140
billion this month, the second strongest January in the past decade
behind 2017, when companies sold $182 billion of debt, according to
Dealogic.
Buying of some investment-grade corporates is outpacing strength
in the Treasury markets, where the 10-year yield fell to 1.680%
Friday from 1.739% Thursday amid concerns about China's coronavirus
outbreak and signs of weakness in European economies. Yields fall
as bond prices rise.
The extra yield investors demand to hold pharmaceutical company
Bayer US's triple-B rated bond due in 2025 instead of Treasurys
fell to about 0.90 percentage points Friday, compared to a spread
of about 0.93 percentage points Thursday, according to data from
MarketAxess.
Spreads have declined in recent months thanks to strong investor
appetite. The average yield of a Bank Of America Corp.
investment-grade bond index was 2.74% Thursday, compared to 4.25%
at the end of 2018, according to CreditSights.
Junk debt is also climbing. Community Health System's new bond
due 2025 was the most-traded corporate bond Friday morning, hitting
a low yield of about 6.27% compared to around 6.4% on Thursday,
according to MarketAxess. Bonds of Intelsat SA, a widely traded
proxy for the riskier portion of the high-yield market, traded as
high as 60 cents on the dollar after falling to 56 on Thursday.
In emerging markets, bonds of the Province of Buenos Aires fell
7% this week in thin trade to about 54 cents on the dollar,
according to data from MarketAxess, after the municipality extended
the deadline it set for bondholders to accept a delay in repayment.
Argentine sovereign debt slid with its bond due 2021 falling about
1% to 52.79 cents on the dollar, according to MarketAxess
The WSJ Dollar Index, which measures the U.S. currency against a
basket of 16 others, rose Friday to 90.66 from 90.51 on Thursday
after the European Central Bank signaled it would leave negative
interest rates in place. For the week, the index was up 0.20
point.
Write to Matt Wirz at matthieu.wirz@wsj.com
(END) Dow Jones Newswires
January 25, 2020 02:47 ET (07:47 GMT)
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