Last year the new-issue corporate bond market was so buoyant that 2010 can only disappoint. Indeed, January’s optimism has quickly turned to February’s anxiety, as fears over bond market access for Europe’s peripheral sovereign borrowers have prompted a rise in funding costs and a slowdown in issuance.
The continued volatility in credit spreads across the board caused by Greece’s bungled five-year issue in January and questions about whether it will receive financial aid from the European Union has helped contribute to a slowing in corporate issuance. This is despite the fact that Portugal and Spain, two countries closely associated with Greece’s debt problems, managed to issue bonds in February. The concern remains that as banks face a busy year of debt rollovers, funding costs could rise and, much worse, lower-rated corporates might be shut out of the bond markets altogether. European banks have almost...
