Bangkok--21 Feb--Standard & Poor's
The U.S. corporate bond market is likely to face strong issuance activity in 2007 and 2008, a substantial portion of which relates to the refunding of maturing and callable debt, according to an article published today by Standard & Poor's. The article, which is titled "Refunding Outlook For U.S. Corporate Bonds," estimates that $328 billion of financial and nonfinancial company debt is likely to be refunded in 2007, with an additional $365 billion due in 2008.
"Rather than refinance, firms might opt to retire debt, as corporate balance sheets look fairly liquid," observed Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "Conversely, debt-financed equity buybacks and M&A activity should keep the issuance pipeline strong."
On balance, while refunding activity in 2007 should average $27 billion per month, gross issuance is expected to clock an $83 billion monthly pace. For 2008, we expect gross issuance to move down to a $70 billion-$75 billion monthly pace, but refunding needs will be fairly steady at $30 billion per month. Thus, monthly net bond supply--gross issuance less refunding--should average out to $55 billion in 2007 but move to a slightly lower $40 billion-$45 billion monthly pace in 2008.
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Media contact:
Mimi Barker, New York (1) 212-438-5054
Analyst Contacts:
Diane Vazza, New York (1) 212-438-2760