The American corporate-bond market continues to show a lot of popularity, even with the solid returns posted by the stock market so far this year. Investment-grade corporate bonds and ETFs took in a remarkable $28 billion from individual investors for the first quarter of 2012. That's more than the combined total they took in over the last two quarters of 2011.
At the same time, the yields on the bonds has been dropping, which shouldn't be a surprise to anyone. As bonds become more popular, the interest the issuers need to pay to get people to finance their debt drops. So as all that money has been pouring into bonds, the average yield on corporate bonds has dropped from 3.8 percent to 3.4 percent through the first quarter.
And, oddly enough, companies aren't issuing great amounts of this debt. Barclays estimates that the total amount of investment-grade bonds issued this year will be the lowest since 2007. That leaves an awful lot of bond investors chasing after a dwindling number of bonds.
No comments:
Post a Comment