The investment-grade corporate market (BND) came back to life after a dead week due to the Labor Day weekend and Jewish holidays. Last week, 18 deals priced, for a combined total of $21.5 billion in just three days since Labor Day was a holiday and Friday was quiet due to the imminent release of key macro indicators.
The investment-grade bond (LQD) volume was higher than the expected 15 billion to 20 billion expected, likely due to an overhang of supply. Many issuers are trying to reach the market before the FOMC (Federal Open Market Commitee) meets, since if quantitative easing is indeed tapered, then rates may correct upwards and increase borrowing costs across the board.
September is expected to have a monster volume of $80 billion, mainly driven by anywhere between $20 billion and $35 billion from the Verizon Wireless deal. Verizon agreed last week to purchase Vodafone’s 45% stake in Verizon wireless for $130 billion.1
The volumes this week will highly depend on the performance of the Verizon deal as well as continued speculation about tapering by the Fed.
Read on to see what fund flows are saying about investors’ appetite towards the asset class.
- The price was revised upwards from the initial talks of $130 billion. ↩
- Part 1 - Yield curve continues steepening, disappointing expectations
- Part 2 - Why budget talks and Syria friction add noise to bond yields
- Part 3 - Fixed income markets awaken after summer’s end
- Part 4 - Why corporate bond (BND) investors have mixed feelings
- Part 5 - High yield bond market is back to life after 2 weeks of silence
- Part 6 - Why strong weekly issuance is key to support strong bond prices
- Part 7 - Why investor appetite for high yield bonds (JNK) is dwindling
- Part 8 - Leveraged loans have small week, but pipeline builds up
- Part 9 - Investors favor leveraged loans, but equities may come back soon
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