Week Of Falling Corporate Bond Sales A Sign Of Things To Come

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The week ended January 22 2010 should serve as a warning sign of things to come for corporate bond investors. Coming off of the back of a successful 2009 for bond issuance, global bond sales fell 52% to US$48bn during the aforementioned week, down from US$99.8bn a week earlier - according to data from Bloomberg. In addition, yield spreads widened for the first time since November 27 2009, based on Bank of America Merrill Lynch 's Global Broad Market Corporate Index. The catalyst for this bond market drop was President Obama's speech on banking reform and the ensuing deterioration in market sentiment. The sudden decline in bond sales serves to underline a wider deterioration of the bond market in the medium term. CFW 's view is that on the back of an expected glut in the supply of government bonds, corporate yields will rise. Until this scenario plays out though, companies will be desperate to take advantage of favourable conditions to tap the market.