Deals Intelligence: 07-29-08
Deals Intelligence with Sandy Anglin of the Deals Intelligence Team at Thomson Reuters for the week of 07-29-08
Transcript:
Hi, I’m Sandy Anglin with the Investment Banking Division of Thomson Reuters, here to bring you this week’s Deals Intelligence.
In the US debt markets, investment grade issuance slowed to a crawl in July. In total there were 29 issues totaling $20.2 billion in proceeds for the month. This represents the lowest monthly level since July of 2002 when volume came to $13.1 billion, and the lowest level in terms of number of issues since February 1990 when there were 20 issues. This level of activity is far cry from the $145.6 billion in issuance brought to market in May of this year, the highest level of investment grade issuance ever.
US high yield debt issuance also posted declines in the month of July. In total there were six issues with aggregate proceeds of $2.8 billion, a decline of 67% from the previous month. Additionally, the average spread paid by borrowers on high yield debt issues surged in July. The spread, or the difference between the rate on the issue and the rate on a Treasury of comparable maturity, is an indicator of the price of a security relative to a risk free security. In essence, a higher spread indicates a higher cost to the borrower for capital. In July the average spread on high yield issuance reached 783 basis points, or 7.8% over the treasury rate. In comparison, the average spread on a high yield issue was just 590 basis points in the second quarter.
The cause of the debt fall-off in July is likely two-fold. First, July is historically a slow month for the Capital MarkMarkets. Secondly, underwriters and investors alike are waiting to see how the high issuance of the second quarter fares before bringing additional issues to market in the current, skittish marketplace.
Morgan Stanley topped Thomson Reuter’s league table for high yield in the month of July, ranking first and serving as book runner on 3 issues totaling $726 million in proceeds. Bank of America ranked second with credit on 4 issues, the most of any underwriter, accounting for $658 in proceeds.
In investment grade issuance JP Morgan ranked first and Bank of America second, with $3.2 and 2.3 billion in issuance from 12 and 10 issues, respectively.
In all corporate issuance, that is the total of investment grade and high yield issuance, JP Morgan and Bank of America led the ranks, echoing the investment grade league table.
That’s all for this week’s Deals Intelligence. Be sure to check back next week for more insight and analysis from Thomson Reuters.
Duration : 0:2:44
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