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Borrowing $48 Billion



March 12, 2012 – Comments (2)

Last week was the biggest slug of new US$ corporate bonds I've seen since I started paying attention.  Over $48 billion was at or near the highest one-week total ever issued.

I summarized the five biggest US-based borrowers in my latest article.

A developing trend is borrowers from outside the US tapping a sizeable slice of the borrowing pie.  Last week, nearly a quarter of the new debt was issued by foreign financial firms.  Many of those companies, like Toronto-Dominion and Royal Bank of Canada, may just be financing their US operations, but I suspect there's more to it than that.  The big bank borrowers were Commonwealth Bank of Australia and Toronto-Dominion with four and three billion respectively.

My guess is the Fed's extended zero interest rate policy is making the US$ attractive an currency for issuing debt in carry trades.  'course, international finance is way outside my swim lane, so that guess could be dead wrong.

Any other thoughts on why there seems to be an uptick in companies taking trips to the US credit markets?

As always, thoughts, comments and questions are welcome here or at the article.

Fool on, Russ

2 Comments – Post Your Own

#1) On March 14, 2012 at 1:41 PM, lemoneater (58.46) wrote:

That's interesting. Toronto Dominion recently took over Carolina First where I bank. I did not realize it was so huge of an operation.

Is this a vote of confidence from our NorthAmerican neighbor? 


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#2) On March 14, 2012 at 8:32 PM, rd80 (96.82) wrote:

Hey there,

Good to hear from you and I hope you're doing well.

TD is a pretty sizable banking organization.  Its branches are pretty common in my area and, if ads are any indication, TD Ameritrade is a big operation.

I don't know if the banks floating US$ debt is a vote of confidence or just because the Fed's operation twist has made it ridiculously cheap to borrow greenbacks.  In recent weeks banks from just about every part of the world have been issuing bonds here. 

Reuter's bond issue calendar for this week shows another handful of foreign banks coming to market. Wish I understood it more and had a way to trade it and make some money.

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