Windows of opportunity in US bonds
US and international companies are taking advantage of brief periods of low bond yields to issue into the hungry US market.
Surprisingly poor US employment figures at the beginning of the month raised speculation that interest rates would not rise as had been predicted, pushing up bond prices and sending yields tumbling.
Several companies took advantage of these low yields. SPC Communications, United Health Group, Consumers Energy and Anheuser Busch all issued on Wednesday this week.
Ian Harjette, head of high grade debt syndicate at Bank of America, which was involved with all four issues, says: ?It was amazing. Nothing had closed all week and then we had four on one day.
?Issuers are really making the most of windows of opportunity. Everyone in the bond markets hates volatility with a passion, and statements or results bring a brief period of certainty.?
The lack of supply in the first six months of 2004 also means US investors are hungry for new issuance. Credit spreads are still relatively tight, only three to four basis points wider on the year.
The same pattern occurred at the end of July, when anticipation of strong employment figures and so higher yields pushed several financial institutions into the bond market.