US bond sales rise as contagion concern fades
Wednesday, 19 May 2010
NEW YORK, May 18 (Bloomberg): Corporate bond issuance in the US is showing signs of a revival as investors speculate companies in the world's largest economy will be insulated from the worst of Europe's sovereign debt crisis.
Borrowers came to the market with at least $3.2 billion of debt yesterday, after selling $1.15 billion a week earlier and $13.6 billion in the five days ended May 14, according to data. Franklin Resources Inc, the manager of the Franklin and Templeton mutual funds, sold $900 million of notes in its first offering since 2003. EOG Resources Inc, a Houston-based pipeline operator, issued $1 billion of bonds.
The flurry signals improving sentiment that the European plan to provide almost $1 trillion of loans to help indebted nations avoid default will keep the regional crisis from spreading around the globe.
Of the 460 companies in the Standard & Poor's 500 Index that reported first-quarter results, 77 percent said earnings exceeded analysts' estimates, Bloomberg data show.
"Fundamentally, companies are doing great and balance sheets are strong," said Gregory Nassour, head of investment-grade portfolio management at Valley Forge, Pennsylvania-based Vanguard Group Inc, who helps oversee about $40 billion of assets.
"I would expect issuance to continue unless something new comes out of Europe to quiet it down."
Nissan Motor Corp of Yokohama, Japan, the country's third- largest carmaker, plans to sell $750 million of bonds backed by auto leases, a person familiar with the offering said. Banco Santander SA, Spain's largest bank, will issue $1 billion of notes backed by auto loans, the bank said yesterday in a filing with the US Securities and Exchange Commission.
The Higher Education Loan Authority of the State of Missouri is marketing $817.7 million of debt backed by student loans, a person said.
Europe's bond market has yet recover, with no benchmark corporate sales, typically for at least 500 million euros ($617 million), since May 5, according data.
Borrowers came to the market with at least $3.2 billion of debt yesterday, after selling $1.15 billion a week earlier and $13.6 billion in the five days ended May 14, according to data. Franklin Resources Inc, the manager of the Franklin and Templeton mutual funds, sold $900 million of notes in its first offering since 2003. EOG Resources Inc, a Houston-based pipeline operator, issued $1 billion of bonds.
The flurry signals improving sentiment that the European plan to provide almost $1 trillion of loans to help indebted nations avoid default will keep the regional crisis from spreading around the globe.
Of the 460 companies in the Standard & Poor's 500 Index that reported first-quarter results, 77 percent said earnings exceeded analysts' estimates, Bloomberg data show.
"Fundamentally, companies are doing great and balance sheets are strong," said Gregory Nassour, head of investment-grade portfolio management at Valley Forge, Pennsylvania-based Vanguard Group Inc, who helps oversee about $40 billion of assets.
"I would expect issuance to continue unless something new comes out of Europe to quiet it down."
Nissan Motor Corp of Yokohama, Japan, the country's third- largest carmaker, plans to sell $750 million of bonds backed by auto leases, a person familiar with the offering said. Banco Santander SA, Spain's largest bank, will issue $1 billion of notes backed by auto loans, the bank said yesterday in a filing with the US Securities and Exchange Commission.
The Higher Education Loan Authority of the State of Missouri is marketing $817.7 million of debt backed by student loans, a person said.
Europe's bond market has yet recover, with no benchmark corporate sales, typically for at least 500 million euros ($617 million), since May 5, according data.