Thursday, December 5, 2019

Twitter junk bond frenzy - Record low yields

Banks are marketing $600m of eight-year bonds at a yield of about 3.875%. The inaugural bond has garnered more than $6 billion of investor orders. With almost $6 billion of cash on its balance sheet, a market cap of $23.6 billion and just $2.1 billion of existing debt, the bond market will no doubt welcome the new junk bond with open wallets.

Credit spreads (difference between corporate and benchmark yields) have fallen in line with the drop in government yields. There has rarely been a better time to issue debt.