Last week in bonds
Here's a rundown of some of the action in last week's new corporate bond issues.
The total new issue $ value was down from the previous several weeks. Not a lot of excitement, but a couple of trends continue to develop.
Companies with good, and even some not so good, credit ratings are saving quite a bit of money by refinancing existing debt. For example, SO subsidiary Alabama Power will be paying $10 million per year less on $400 million of new debt than it's paying on $200 million of existing debt being redeemed. Alabama Power improves its cashflow and adds $200 million to its coffers.
It's also becoming very common for firms based outside the US to make up a sizeable portion of the dollar-denominated borrowing. Last week, Mizuho Corporate Bank was the biggest borrower in the US markets with $2.5 billion. Second place was also based in Japan, Nippon Life Insurance tapped markets for $2 billion. Both of those were private placements.
The past two weeks have also seen quite a bit of high-yield, aka junk, bond issues. Two weeks doesn't make a trend, but it's something I'll be watching. It's also consistent with some articles I've seen covering strong demand in the junk market as investors reach for yield.
I'll be making this a regular, weekly series. It should usually post on Mondays for anyone interested in following along. I know, today is Tuesday - I had a glitch with the article publishing system that pushed it back a bit.
As always, comments, questions, recommendations are welcome here or at the article.
Disclosure: Long SO.