Companies Should Borrow While They Can
"The corporate-bond market has started the year in frenetic fashion. Borrowers are rightly taking advantage of the current good economic news and increased risk appetite to issue while the going is good. But the risk of rising government bond yields and a possible resurgence of the sovereign debt crisis means these borrower-friendly times may not last.
By the end of Wednesday, just three business days into the year, investment-grade bond issuance in the U.S. stood at just over $27 billion, according to Barclays Capital, a cracking pace given the January record stands at $80 billion. In Europe, meanwhile, the covered bond market had racked up €14.25 billion ($18.75 billion) of issuance in three days, smashing the previous full-week record of €12 billion, and that was before the six deals announced Thursday.
Banks understandably have been among the biggest issuers. Regulators and central bankers are concerned about the wall of refinancing that comes due, particularly as government-guaranteed bonds sold at the height of the crisis mature. Banks are particularly exposed to the risk..."