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Credit Insights

Corporate Bond Investors Buying Anything in Sight

Despite the drama out of Europe, investors are continuing to pour money into U.S. corporate bonds.

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Demand for corporate bonds remains unabated, irrespective of whether central banks ease or don't ease monetary policy. One trader described the corporate bond market last week as a "lift-a-thon"--investors bought everything and anything in sight.

Despite the drama out of Europe, investors are continuing to pour money into U.S. corporate bonds, with A and BBB+ rated issuers being in the sweet spot of investor demand. The new-issue market was active at the beginning of last week as many issuers came to market to beat the scheduled announcements from the Fed and ECB. For corporations for which we provide issuer credit ratings, $13.2 billion of new bonds were priced over the course of the week. This supply was easily swept up by the market, but still failed to quench the seemingly insatiable demand. We expect volume in the new-issue market will ease throughout the rest of August, which is seasonally one of the slowest months of the year as investors head to the beach for the final days of summer.

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David Sekera has a position in the following securities mentioned above: INTC. Find out about Morningstar’s editorial policies.