Look for more corporate bond-friendly times ahead this week.
Most yields have fallen for the past couple of weeks and issuers and holders of the everything from Treasurys to double-B-rated corporate debt can reasonably look forward to more of the same, at least over the short haul.
The Dow Jones Industrial Average finished last week in a virtual dead heat and the Nasdaq Composite was off more than 2 percent.
In addition, the market for equity continued to just about hold its own in one other respect: Accenture’s IPO came off largely without a hitch, the consulting firm succeeding in raising nearly $1.7 billion by pricing its 115 million share deal at $14.50, near the top of its range.
But, as the week closed, the stock was trading at $15, hardly a “blockbuster” advance. More importantly, there are no IPOs even approaching Accenture in size remotely on the horizon.
Debt markets present a much less ambiguous picture. The bellwether 10-year Treasury was yielding 5.11 percent as of Friday afternoon, a gain of about nine basis points on the week and 25 basis points lower than the figure two weeks ago. And most corporate bonds have been tracking Treasurys.
The most recent impetus for this movement had to be Federal Reserve Chairman Alan Greenspan’s July 18 testimony before the House of Representatives Committee on Financial Services. The chairman, who gave a distinctly bearish take on things during the first installment in his semi-annual monetary report, will take his show to the Senate Tuesday, July 24.
Few Issues In Pipeline
That being said, the week and weeks ahead will see relatively little in the way of new corporate bond issuance:
In investment-grade, there is $1.3 billion planned over the near future. The two issuers making up this tally are Humana, which recently filed a shelf registration for $300 million of five-year senior (Baa3/BBB) notes, and scientific book publisher Reed Elsevier Plc., which plans $1 billion of bond denominated in euros and dollars to help pay for its purchase of Harcourt General.
There is nearly $1.5 billion in the junk pipeline. This includes:
Click here for last week’s Capital Markets column.