Yields Make Debt Issuance Attractive

Portugal successfully floated debt in two auctions, but at a very high yield. In one auction, $839 million of notes due in 2013 were sold at a yield of 4.086 percent; the previous auction of the same maturiy was sold at a yield of 3.597 percent.

At these yields, why not issue debt? According to Miller Tabak, we saw $13.9 bn in US investment grade bonds price yesterday, including substantial offerings from Home Depot and Dell . Dell, for example, price $1.5 billion in three tranches. The $500 million three year tranched priced at 70 basis points over Treasuries

And this morning, Hewlett-Packard is set to sell debt.

Pres. Obama reportedly will reject the idea of of extending the Bush tax cuts to all income earners, including those over $250,000, at his speech in Cleveland today.

This will certainly poison the political atmosphere even further, make it unlikely that any deal will be reached on taxes before the November elections, imperils his plans for tax breaks for capital expenditures and an extension of a tax credit for research and development, and likely dooms his plan for an additional $50 billion in expenditures for infrastructure projects.


1) Altera , speaking at a conference, affirmed full year guidance.

The trend this morning: although a slew of companies continued to manage their costs well to strengthen earnings, they failed to meet top line expectations:

2) Talbots drops 10 percent after its sales numbers and outlook disappointed the Street. Cost controls and better inventory management led to higher margins enabling the women's apparel retailer to report better-than-expected Q2 earnings ($0.14 vs. $0.05 consensus). However, sales fell short of analyst forecasts ($301 million vs. $314 million consensus), and the company lowered its sales outlook to "low-single digits" growth. Q3 earnings guidance of $0.22-$0.28 also falls below expectations of $0.30.

3) Navistar beat Q3 estimates ($1.83 vs. $1.47) as margins soared from a strong 29 percent gain in revenues and continued cost cuts. Despite the strong top line growth, sales actually were short of analyst expectations, forcing the truck maker to cut its revenue forecast for the full year to $12 billion (vs.$12.5 billion consensus). Also impacting its revenues this year, a deferral of military sales until next year.

4) Smithfield reversed its loss from a year ago and reported a profit of $0.46 per share, inline with estimates. Higher hog prices and reductions in expenses helped the meat producer more than triple its margins. Although hog production rebounded sharply as that unit's sales jumped 36 percent, sales for the overall company still fell short of expectations.

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