A LOAD OF JUNK ON ITS WAY TO LONDON
A decline in US interest rates should be great news for dollar bond
markets. So far this year the yield on 10-year US Treasury bonds has
plunged from 9% to around 7.3% by early last month. Traditionally, the
yields on Eurobonds would have felt the Treasuries' gravitational
pull and meekly followed the US market downwards. They haven't.
The US treasury bond rally has outstripped the Eurobond market's
comparatively feeble efforts at perking up. This has pushed yields on
Eurobonds -- and especially US corporate issues -- far from Treasuries.
The consequences of this change could be dramatic for the Eurobond
market. Already some syndicate managers are talking about a new sort of
Eurobond market where top quality US corporate names are rarer and junk
issues are more common. In the US the corporate bond market is enjoying
a wild boom, even though...
