Corporate Bond Trading Highest Since ‘07 as Credit Freeze Thaws

[TomClash]

Source: Bloomberg

Feb. 20 (Bloomberg) -- Corporate bond trading in the U.S. is rising to the highest in two years, adding to evidence that credit markets are thawing even with stocks off to their worst start since the 1920s as the recession deepens.

An average $17.1 billion of corporate bonds traded daily this month, compared with $17.7 billion in January, according to the Financial Industry Regulatory Authority. The business is up from last year’s low of $9.4 billion in August and reached the highest level since February 2007, Finra data show.

“We saw just dramatic increases in our corporate business,” said Dan Leland, head of taxable capital markets at Dallas-based Southwest Securities, a unit of SWS Group Inc. “One of the last places you can get an attractive yield with relative safety is in the corporate arena. The equity markets just continue to deteriorate.”

Corporate bond trading is accelerating after the recession pushed investment-grade yields to 9.3 percent in October, the highest in 17 years, according to data compiled by Merrill Lynch & Co. Investors are betting yields are high enough to compensate for defaults that Moody’s Investors Service forecast will rise to 16.4 percent by November, the highest since the Great Depression and about three times the current rate.

Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=aRan_qqkjrAo&refer=home

---

Bypassing the banks and going directly to the source to get a higher return. So while equities are dead due to falling earnings, the debt basis for a recovery is beginning to percolate. A little good news for a change.

[maseman]

1. That is good news

There was a very bight guy on Charlie Rose last night saying that instead of propping up the old monolithic banks the government should create new banks that are much more web-based moving forward. It would create more green, more tech jobs, etc. without the massive executive level involved.

[TomClash]

3. I don't know if I like this idea

But new banks are already being created.

[Gin]

2. during one of the CSPAN hearings regarding this financial mess, a witness said he

thought Finra was a fraud...he was a very interesting whistle blower.