Company bond sales worldwide reached at least $126 billion last week in the busiest period ever as borrowing costs hovered close to record lows.
Bank of America Corp., the second-biggest U.S. lender by assets, raised $6 billion and Torino, Italy-based Intesa Sanpaolo SpA issued $3.5 billion as they led borrowers in the most active week since $124.3 billion in the five days ended Sept. 14, according to data compiled by Bloomberg. Sales increased from $27.9 billion the previous week and compare with a 2012 weekly average of $76 billion.
Sales rose following a banner year in 2012, when offerings reached an unprecedented $3.95 trillion, as issuers rushed to lock in rates that touched a record-low 3.243 percent on Dec. 28. Investors are opening the year eager to invest cash in corporate bonds, according to Jody Lurie at Janney Montgomery Scott LLC.
“There’s a mentality of, ’Let’s buy up again,”’ Lurie, a Philadelphia-based corporate credit analyst, said in a telephone interview. “With the start of the year, they’re starting to spend again.”
The extra yield investors demand to own corporate bonds rather than government debentures decreased to 206 basis points on Jan. 11 from 211 basis points on Jan. 4, according to the Bank of America Merrill Lynch Global Corporate & High Yield index. Yields decreased 5 basis points to 3.27 percent from 3.32 percent. A basis point is 0.01 percentage point.