Whether or not a Greece bailout is good or bad for fixed income in the long run, one thing is for sure:
High-grade debt issuance this week collapsed 90% from normal levels.
It’s not so much that companies don’t want capital, it’s that they’re unsure if any demand is even out there:
Borrowers in the U.S. and Europe sold $4.71 billion of high-grade securities this week, the least this year and about 90 per cent less than the average $52.9 billion, according to data compiled by Bloomberg. Speculative-grade, or junk, bonds in the U.S. have lost 0.09 per cent in 2009 after gaining 1.52 per cent in January, Bank of America Merrill Lynch index data show.
“Sentiment has turned significantly amid concerns about sovereign deficits and problems surrounding Greece and other peripheral euro-zone economies,” Simon Ballard, a senior credit strategist at RBC Capital Markets in London said yesterday. “For the moment, we’re unlikely to see much in the way of primary market activity as investor sentiment remains fragile and the broad market feeling is one of nervousness.”