Corporate Bonds

November 23rd, 2009 9:54 am | by John Jansen |

Corporate bonds are firm at the open as investors genuflect to the strong signals emanating from the equity market. One salesman noted that most sectors are 1 basis point to 2 basis points wider.

There are no new issues on the burner at the present time.

Just to make the point of the extent of the rally in credit this year, I offer a couple of bonds as examples.

Long time readers will recall that I chronicled ad nauseam the plight of an American Express 5year note which was issued in August 2008 as the financial markets spiraled into a near collapse. When the bond was issued ( and I do not have the level at which it came) it priced over 100 basis points cheap to outstanding Amex paper.

At the height of the crisis last winter that bond traded regularly in the 600s and 7800s versus benchmark Treasuries. The widest quote I ever observed was 825/775.

Five year Amex paper trades in the mid 150s today.

Second example. last week Harley Davidson sold $ 500 million 5 years at T+ 363 basis points.

In February this year they sold $ 600 million 5 year notes with a 15 percent coupon.

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  1. 5 Responses to “Corporate Bonds”

  2. By Bman on Nov 23, 2009 | Reply

    yield grab is definately on – for now…Gross says to buy utilities.

  3. By gab on Nov 23, 2009 | Reply

    John – I’m pretty sure you’re talking about the AXP 7.30% 8/20/13. They came 425 off 5′s on 8/15/08 and traded close to or through +800 in October ’08 and March of ’09.

    Whew! Seems like ancient history now that they’re trading +165′ish.

  4. By ejsmith on Nov 23, 2009 | Reply

    Bman – hope his utilities call works out better than last month’s “top of the rally in risky assets” prediction.

    dunno…. Feels like this dollar pummelling has got to start to bite equity and bond markets fairly soon. All the authorities have managed to do with the recent jawboning is illustrate that there is zero risk in selling all the dollars you can lever up to do.

  5. By Bman on Nov 23, 2009 | Reply

    ejsmith – agreed. I think retail is in now and that usually portends a “mature” rally.

  6. By John Jansen on Nov 23, 2009 | Reply

    Gab,

    i believe that is the one. Followed that with religious fervor. I think it was over $ 2billion and they sold it on a summer Friday when everyone was in the Hamptons!!!

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