US DCM: Where credit's at
Low rates for borrowers and investors’ search for yield are hardly new phenomena. But suddenly, in the US, the two have combined to create feverish bond market activity for local and foreign issuers alike. How long can the DCM boom last?
More than $100 billion-worth of dollar-denominated investment-grade bonds was issued in the first three weeks of September. It is only the third time since 1995 that more than $100 billion has been issued in a single month, according to Dealogic. Bolstered by a lull in economic bad news, investors are piling into credit, while issuers are taking advantage of the positive market sentiment and increased appetite.
That raises a question: is 2012 – for the most part a terrible 12 months for the financial markets – going to be a $1 trillion year in US credit?
For issuers, the US debt capital market could not be more welcoming at present. "Back in July we were talking with issuers who said they were done financing for the year, but come September they started to rethink," says Richard Zogheb, co-head of capital markets origination for the Americas at Citi. "Some issuers say that with treasuries where they are, it is the best period for raising money they have seen in some time." Issuers in this period have included both household names and infrequent borrowers.