Crunch time for US debt
Have you refinanced this quarter's maturing bonds early? If so, well done. If not, you may be in trouble. The largest amount of US debt for five years is due to mature this quarter, and spreads are only going to widen.
Fitch Ratings and Thomson Financial put the figure for US corporate debt maturing this quarter at $113.6 billion and $117.3 billion respectively, the largest amount since 2000. At the same time, the Federal Reserve seems poised to raise interest rates again and concerns over General Motors and AIG are pulling spreads wider.
Many US corporates took advantage of the record low spreads in the first two months of the year to refinance their debt early. Those that did will find their deal looks even better in the next three months as a flood of issuers come to market. Those that didn't may well be kicking themselves.
Opinion is split among market commentators as to how much of an impact the bond issuance will have. Some say it will prove to be crunch time for treasurers as they scramble to get deals away, others are more sanguine. It all depends how many took the opportunity to refinance.