Fri, Dec 05, 2014 - Page 15 News List

Corporate bond sales hit high on forecast rate rise

Bloomberg

Global corporate bond sales set an annual record as companies lock in borrowing costs that forecasters said are bound to rise.

Softbank Corp, Amazon.com Inc and Medtronic Inc were among borrowers that helped push issuance to US$3.974 trillion past the previous 2012 peak of US$3.973 trillion, according to data compiled by Bloomberg. Sales in the US have already reached an unprecedented US$1.5 trillion.

Issuance defied predictions of a slowdown made by underwriters from Bank of America Corp to Barclays PLC as a decline in benchmark costs that no one foresaw pushed yields to record lows.

While central banks in Europe and Japan have stepped up their own stimulus efforts, the likelihood the US Federal Reserve would boost interest rates has fueled company borrowings worldwide.

“We’ve seen so much issuance just because everybody’s thinking that next year’s going to be the year when rates start rising,” Leader Capital Corp fixed-income analyst Nathan Barnard said on Wednesday in a telephone interview. “It’s cheap financing still, so why not do that?”

Investors are poised to earn 7.67 percent this year on debt from the most creditworthy to the riskiest borrowers worldwide, according to the Bank of America Merrill Lynch Global Corporate Index. Those would be the largest gains since a 10.78 percent return in 2012, the index data show.

Chinese companies issued a record amount of securities this year, boosted by the Chinese central bank’s decision to ease monetary policy as it sought to ensure economic growth would meet a 7.5 percent annual target.

Japanese wireless carrier Softbank sold ¥400 billion (US$3.4 billion) 2.5 percent, seven-year bonds yesterday, Bloomberg data show.

US corporate bond offerings were bolstered this week by Medtronic’s US$17 billion sale and Amazon’s US$6 billion offering, Bloomberg data show.

Alibaba Group Holding Ltd (阿里巴巴), a Hangzhou, China-based company, raised US$8 billion in dollar-denominated bonds last month, its debut offering and Asia’s largest ever US dollar-denominated bond sale, Bloomberg data show.

JPMorgan Chase & Co is the top underwriter of international and US bond sales this year, Bloomberg data show. Deutsche Bank AG has managed the most euromarket bond offers, at US$165.5 billion, and HSBC Holdings PLC underwrote the most Asia-Pacific bonds excluding those issued in Japan, the data show.

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