Magazine article American Banker

Investment-Grade Bond Issuance Way Down

Magazine article American Banker

Investment-Grade Bond Issuance Way Down

Article excerpt

Rising interest rates took their toll on the bond underwriting business in the first quarter.

Investment-grade corporations issued $59.9 billion worth of debt in the first three months of this year, off nearly 35% from $91.2 billion in the year-earlier period, according to Securities Data Co.

Even without the spike in rates, though, issuance still would have been off from last year's torrid pace, said Robert Hugin, who runs J.P. Morgan Securities Inc.'s taxable-fixed-income desk.

He expects more volatility in the bond market in the second quarter. "Issuers will need to be more flexible and opportunistic, to be ready to move into rallies, because we expect them to be short-lived," he added.

Issuance of high-yield junk bonds, meanwhile, was essentially flat. Companies with speculative-grade credit ratings sold $14.5 billion worth of bonds in the first quarter, up slightly from $14.1 billion a year earlier.

Among commercial banks, only the Morgan unit, at No. 7, ranked among the top 10 underwriters of investment-grade debt. It had the same ranking for 1993 as a whole.

In the junk-bond arena, no commercial banks ranked in the top 10. The underwriter units of Bankers Trust New York Corp. and Citicorp ranked eighth and 10th, respectively, in that category for all of 1993.

Investment Grade Leaders
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                                Proceeds    Market      Number
                               (billions)    share     of issues
Merrill Lynch & Co. … 
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