Company bond sales worldwide are on pace for the slowest February since 2008 as the prospect of rising interest rates in the U.S. and persistent recession in Europe quashes the busiest start to a year on record.
“Economic conditions don’t warrant necessarily any significant increases in funding,” Kevin Flanagan, chief fixed- income strategist at Morgan Stanley Smith Barney in Purchase, New York, said in a telephone interview. “In terms of balance sheet and liquidity, cash on hand and refunding, the lion’s share of all that balance sheet repair work has been done.”
The index typically falls as investor confidence improves and rises as it deteriorates. Credit-default swaps pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt. A basis point equals $1,000 annually on a contract protecting $10 million of debt.
Borrowers in the U.S. issued $20.3 billion of debt maturing in about three years this month, the biggest share since March 2011, when they made up $36.6 billion or 23.5 percent of sales, Bloomberg data show. The share of 30-year debt being sold fell to 5.5 percent from 7.7 percent last month.