Corporate Bond Sales Collapse

11-29-2010 • GlobalEconomicAnalysis.blogspot.com

Bernanke's QE II policy did nothing for jobs, nothing for bank lending, nothing for the real economy and had negative benefits for small businesses. However, the Fed did ignite a rally in the stock market and corporate bonds. That corporate bond story now shows signs of unraveling. Please consider Bond Sales Tumble as Ireland Crisis Spills Over Corporate bond issuance worldwide is tumbling on concern that Ireland’s debt crisis will spread across Europe as returns on the securities head toward their worst month since the credit market seizure two years ago. Issuance has slumped 31 percent since Nov. 15, compared with the same period a year earlier, after surging 34 percent in the first half of the month, according to data compiled by Bloomberg. The Organization for Economic Cooperation and Development cut its global growth forecast for next year, predicting a “soft spot” as stimulus dwindles. Corporate bonds are poised for their first monthly loss since May, when they fell 0.4 percent, according to the Bank of America Merrill Lynch Global Broad Market Corporate index as of Nov. 26. They’re on pace for the worst monthly returns since October 2008, when the debt lost 4.44 percent as credit markets froze in the wake of Lehman Brothers Holdings Inc.’s bankruptcy.