Corporate bond issuance gets even cheaper
And you thought 2004 was a great market for issuing corporate debt. Figures just released by iBoxx have shown that in the first two months of 2005 corporate bond spreads narrowed by almost as much as they did in the entirety of last year.
Numbers from the corporate bond index reveal that the euro-aggregate corporate spread has narrowed from around 48bp over gilts to 40bp in January and February. Last year the market narrowed from 60bp to 48bp the whole year, a drop of 20% compared to the 17% already achieved in 2005.
Corporate debt is now only 0.4% more expensive on average than government debt – the narrowest corporate spread since the creation of the euro in 1999.
The US corporate bond market has also seen falling spreads in the first two months of the year, but not quite on the scale of Europe. The US corporate investment grade spread fell from around 89bp to 83bp, a drop of 6.7% compared to the total in 2004 of 13.6%.