Bond Outlook February 18th

When bank lending dries up, what do corporations do to obtain new funding? They turn to the bond markets, and the bond markets are welcoming them. Fortunately for corporate issuers, fixed-income investors are subscribing to new issues, something close to sight unseen. The yields offered by the issuers are higher than those of their existing bonds. However, the issuers are happy to lock in funds at what is still an attractive interest cost, while the buyers are delighted to achieve yields 300 bps and more above governments.