Tuesday, August 25, 2009

(Corporate) Bond Issuance Bursts Through $1 Trillion

(Corporate) Bond Issuance Bursts Through $1,000bn

By David Oakley and Ed Hammond, FT | 18 August 2009

[ Normxxx Here:  Well, I guess the corporate honchos, at least, are not banking on (pun intended) forward earnings!  ]

Global corporate bond issuance has risen above the $1,000bn mark— the first time it has broken through this threshold in a single year— with four months remaining of 2009.

The boom is because of the difficulty companies face in obtaining bank loans and strong demand from investors, who can gain a big yield pick-up on corporate paper compared with government bonds. Investors have switched more of their cash into corporate bonds because they offer better returns than the low interest rates on bank deposits and savings accounts. Corporate bond issuance has risen to $1,103bn so far this year, beating the annual record of $898bn in 2007, according to Dealogic, the data provider.

The jump in issuance has been seen in dollar, euro, yen and sterling-denominated deals. Volumes in dollar, euro and sterling have risen to record annual highs, only eight months into the year, while volumes in yen are close to record levels. Dollar issuance has risen to $487bn, euro issuance to $299bn, yen issuance to $64bn and sterling issuance to $53bn.

In contrast, volumes of syndicated bank loans this year are down 52 per cent vs. 2008 and 69 per cent down vs. 2007, as banks are more reluctant to lend as they repair their balance sheets. So far this year, syndicated bank lending has risen to $1,052bn compared with $2,182bn over the same period in 2008 and $3,369bn over the same period in 2007. Richard Batty, investment director at Standard Life Investments, said: "Corporate bonds are the number one asset choice. We are very overweight in corporate bonds. This is because the spread of corporate bond yields over government bond yields more than compensates for any company default risk."

However, investors are much more choosy over the bonds they buy than they were before the credit crisis, parking most of their money in the big, established investment grade companies in sectors such as utilities and oil and gas. Of the $1,103bn raised this year, $989bn, or 90 per cent, has been in investment-grade bonds, with 30 per cent issued by companies in the utilities and oil and gas sectors.


Insider Buying Remains Near Record Lows

By ThePragmaticCapitalist/InsiderCow | 24 August 2009

24 August 2009 By 11 Comments

One of the most confounding components of the 50% rally in stocks since March has been the extraordinarily low levels of insider buying compared to insider selling. As we've been reporting for months, the negative trend in insider buying and selling continues today. The latest insider buying and selling statistics continue to show a vote of no confidence from corporate insiders. In the last two weeks insiders purchased just over $17MM versus sales of over $700MM. All of this makes you wonder what corporate insiders are seeing that the investment community isn't. The following chart from insidercow shows just how skewed the data has been in recent months:

Click Here, or on the image, to see a larger, undistorted image.

Click Here, or on the image, to see a larger, undistorted image.

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