Capital Markets

Credit Crunch? Not This Week

A handful of investment-grade companies seem impervious to tightening credit markets—at least judging by this week's slew of bond issues.
Stephen TaubAugust 9, 2007

Buoyed by encouraging comments from the Federal Reserve earlier this week, issuers trotted out more than $13 billion worth of paper on Wednesday alone, according to The Wall Street Journal. What’s more, total issuance is expected to top $20 billion this week, reported CNBC on the same day. Among the issuers this week: Merrill Lynch & Co., Kraft Foods Inc., Citigroup Inc. and IBM International, according to the Journal Smaller offerings came from Encana Corp., Wisconsin Power & Light Co., PPL Electric Utilities Corp. and Kroger Co.

Merrill Lynch sold $2.75 billion in five-year notes, with a coupon of 6.05 percent, reported Reuters. It was priced to yield 138 basis points over comparable Treasurys. Meanwhile, Citigroup Inc. sold $1.5 billion in 10-year notes, priced to yield 118 basis points over Treasurys, said the wire service. Kraft sold $3.5 billion debt in a five-part offering.

Scott MacDonald, research director at Aladdin Capital Management, told the Journal that he expects the investment-grade corporate-bond market to see even more supply “unless something blows up,” He opined that the market is in “pretty good shape,” and that risk premiums have “come roaring in and there is a lot more positive sentiment.”