Credit Markets See Glimmer of Hope as Offerings Rebound
Sales of investment-grade U.S. corporate bond rebounded following a recent downturn as Merrill Lynch , Citigroup, Kraft Foods and other companies launched offerings on Wednesday.
"We're seeing a host of issuances come to the market," Tony Crescenzi, chief bond market strategist at Miller Tabak, told CNBC on Wednesday. "Companies such as Merrill Lynch, Kraft and IBM are selling bonds and taking advantage of market conditions."
Debt offerings by U.S. corporations have declined 80% since last year, the fixed income strategist said, when corporate America sold about $1 trillion in corporate bonds.
"That's a very good sign," Crescenzi added, "there's a long way to go but today at least the market is open for business."
The tone in the corporate bond market brightened for the third day in a row as previously- sidelined investors put money to work.
A benchmark-sized dollar bond being priced on Wednesday by Russian natural gas company Gazprom was doing "extremely well," said Vincent Murray, head of investment-grade syndicate at ABN Amro in New York.
Gazprom's bond issue was first marketed at the end of July but the company put off pricing until turmoil in the credit market abated.
Sales of U.S. investment-grade and speculative-rated bonds plunged by 77% last month to just $22 billion, according to financial data provider Dealogic. Credit markets were rattled by concerns about subprime mortgage losses and financings for leveraged buyouts that were pulled, leaving billions of unsold debt on investment banks' books.
Treasury prices moved lower on Wednesday, sending yields higher.