Corporate Issuance Continues at Torrid Pace
Corporate bond market hot: what's up? While equity trading volumes have dried up in November, stock traders are talking about the avalanche of corporate bond issuance this month.
There's been something like $85 billion in new corporate debt issued this month, with $3.7 billion pricing overnight alone.
What's surprising is not just the size, it's how low the yields are.
Example: Boeing priced $1.2 billion in 3-year notes with a 1.875 percent coupon, only 60 basis points above the 3-year Treasury.
Barclay's priced $2 billion in 3-year notes at 2.5 percent, a mere 120 basis points over comparable Treasuries.
And people are buying them. And many more.
What’s going on? Several observations from traders. It’s a sign: 1) of too much liquidity, 2) that many are still not comfortable putting money in riskier investments, like equities.
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