Corporate bond sales worldwide are faltering after setting a record in the first quarter as doubts about the strength of the economic recovery and Europe’s sovereign-debt crisis resurface.
From the U.S. to Europe and Asia, issuance has fallen to the lowest levels of the year in the past two weeks, according to data compiled by Bloomberg. Offerings this month of $87 billion from borrowers led by Deere & Co., the largest maker of agricultural equipment, and Montreal-based Royal Bank of Canada compare with a weekly average of $89.9 billion in the first three months of 2012.
Relative yields on company bonds worldwide rose 6 basis points last week to 207 basis points, or 2.07 percentage points, according to Bank of America Merrill Lynch’s Global Broad Market Corporate index. That’s the biggest rise since spreads widened 18 basis points in the week ended Nov. 25. Yields on the debt fell to 3.39 percent from 3.43 percent on April 5.
Leveraged loans and high-yield bonds are graded below Baa3 by Moody’s Investors Service and lower than BBB- by S&P.
Europe’s flaring debt crisis remains the biggest risk to worldwide economic growth as the region’s governments move to increase their defenses, Lagarde said April 12 at the Brookings Institution in Washington. The IMF chief said she’d scale down her request for $600 billion of additional resources even as yields on Spanish bonds approached the level that preceded bailouts of Greece, Ireland and Portugal.