Corporate bond offerings in the U.S. fell short of the 2011average for the fourth straight week as European leaders raced tocontain the region's sovereign debt crisis.

Time Warner Inc., owner of the Warner Bros. movie studio, andGeneral Electric Co.'s finance unit in Stamford, Connecticut, wereamong issuers that tapped the market for $11.4 billion of debt, 50percent below this year's average, according to data compiled byBloomberg. While offerings rose 32 percent from the previousperiod, 80 percent of issuance came on Oct. 12, the busiest day inalmost a month.

Sales failed to ignite as optimism faded that politicians wouldreach an agreement soon to recapitalize Europe's banks. A benchmarkgauge of U.S. corporate credit risk climbed yesterday from thelowest level in three weeks on concern that the global economy isfaltering after third-quarter investment-banking revenue declinedat JPMorgan Chase & Co. and Alcoa Inc. said profit fell shortof analysts' estimates.

“The sovereign debt crisis and the threats to the global economyare the two issues that are causing most of the volatility in themarketplace,” James Barnes, who helps manage $1 billion infixed-income assets at National Penn Investors Trust Co. inWyomissing, Pennsylvania, said in a telephone interview. “There'smore downside risk than potential on the upside.”

Spreads Narrow

The extra yield investors demand to own investment-gradecorporate bonds instead of Treasuries narrowed 11 basis points thisweek to 254 basis points, according to the Bank of America MerrillLynch U.S. Corporate Master index. Absolute yields on the debt fell7 basis points to 4.07 percent after touching 4.15 percent on Oct.11, the highest level since April 6.

Spreads on high-yield corporate bonds tightened 50 basis pointsto 805 this week while average yields fell 43 basis points to 9.43percent, the Bank of America Merrill Lynch U.S. High Yield MasterII index shows.

High-yield, high-risk debt is rated below Baa3 by Moody'sInvestors Service and less than BBB- by Standard & Poor's. Abasis point is 0.01 percentage point.

JPMorgan said investment-banking revenue fell 13 percent fromthe second quarter as concern that Greece would default and U.S.lawmakers would fail to raise the government's debt ceiling roiledmarkets. Alcoa's earnings, excluding restructuring costs and taxbenefits, were about 14 cents a share. The average of 15 analystestimates compiled by Bloomberg was for 22 cents.

Swaps Rise

The Markit CDX North America Investment Grade Index, whichinvestors use to hedge against losses on corporate debt or tospeculate on creditworthiness, rose 2.2 basis points yesterday to amid-price of 132.5 basis points, according to index administratorMarkit Group Ltd.

The index, which typically rises as investor confidencedeteriorates and falls as it improves, snapped two days of declinesafter dropping from 150.1 on Oct. 3.

Laredo Petroleum Inc., based in Tulsa, Oklahoma, sold $200million of notes due February 2019 that were ranked Caa2 by Moody'sand CCC+ by S&P on Oct. 12 in the first junk-bond offering inmore than two weeks, Bloomberg data show.

J.M. Smucker Co., maker of the top selling retail brand ofcoffee in the U.S., issued $750 million of 3.5 percent, 10-yeardebt yesterday in its biggest-ever bond sale, Bloomberg data show.GE Capital Corp. sold $3 billion of notes in a two-part offeringand Time Warner raised $1 billion on Oct. 12 as companies tappedthe corporate bond market for $9.1 billion in the busiest day sinceSept. 14.

Issuance has exceeded the 2011 weekly average of $22.9 billionjust twice since the period ended June 3, Bloomberg data show.

“We're seeing more healthy undertones in the market, but aresolution in Europe is the big unknown, and until that's fully outof the way we're going to have a lot of volatility and investorsare going to be focused on managing that risk,” Arthur Tetyevsky, acredit strategist at Jefferies Group Inc. in New York, said in atelephone interview.

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