Search

The swift rally in stock markets this year caught everyone's attention. But with far less fanfare, a frenzy has been taking place in the market for corporate bonds. When credit markets practically shut down last year, businesses had to pay huge premiums to raise money from investors, offering returns of 10 to 20 percent to anyone who would buy a company's debt. Now, investors are the ones paying higher prices as they race back into the bond markets, where companies and governments go to raise money for new projects and mergers, and to finance their daily operations. [ABSTRACT FROM PUBLISHER]

ARE the credit markets showing some signs of revival? At first glance, it appears that the answer is yes, at least for high-quality corporate borrowers. The volume of investment-grade corporate bonds issued in Europe and Asia in the first three months of this year was the highest ever for any quarter, while in the United States the total fell just short of the record. [ABSTRACT FROM PUBLISHER]

THE credit markets led stocks and the economy into trouble, and they may help lead the way out when a recovery begins. Some bond specialists contend that prices are so low and yields so high that they are immune from anything short of disaster -- and maybe even that, too. Yields on bonds that carry credit risk, which these days means almost everything, have exceeded or approached record levels, compared with Treasury bonds with similar maturities. Investment-grade corporate bonds, the paper issued by sound, blue-chip companies, yield close to 5 percentage points more than Treasuries. Just after the 2001 recession, the spread peaked at about 2.5 percentage points. [ABSTRACT FROM PUBLISHER]