When all you read is gloom, turn here for a much different perspective.

Saturday, February 21, 2009

All Thawed Out - Debt Sales Now at Record Levels

Are any of you hearing arguments that credit markets are still frozen? If indeed they are, it is currently very difficult to find any real evidence to support that claim. That is great news for the economy.

In fact there are some reports now that commercial debt sales are ongoing at record levels. In a recent report at Bloomberg the assertion is that "companies are selling debt at an unprecedented pace this year as they take advantage of a rally in credit to raise cash."

Ashish Shah, of Barclays Capital agrees, "This year’s record bond issuance shows that government steps to stabilize the financial system are boosting highly rated debt markets."

Stuart Hosansky, at Vanguard Group, also observes that currently, "If a single-A rated company or above comes to market, there is significant demand."

"You’ll see continued strength in investment-grade bonds, Shah continued. "The demand is there. Liquidity continues to improve across the credit markets."

In fact according to the Bloomberg data, daily debt issuance is smashing records week after week this year. On Jan 29th, companies issued paper to raise a record $17.5B in cash for their books breaking the early January record. As you can see from the Bloomberg chart, on Feb 19th that number was beat handily.

Add to this the details that you have read here: that there is no credit crunch at most banks. And that several additional sources recently have revisited that assertion and verified the growing consumer loan data here and here.

One must come to the conclusions that:

1) Commercial debt sales are now ongoing at increasingly record levels.
2) Consumer loans continue at a healthy rate.

With perhaps the exception of some larger elite banks with continued junk on their books, the majority of US banks have been immune to this toxicity and the credit markets are now for the most part all thawed out.

These conclusions are significant pieces of further evidence and positive bounce that point to increased economic health later this year.

(Thanks to reader john c for the pointer to the bloomberg story and data. Please keep those good news stories coming to good.news.econ@gmail.com)


  1. Very interesting post. I suspect investors are hungry for quality paper yielding anything over TBill rates?

  2. You are so very true commercial debt sales are at all time and will remain the same for some time now. I think consumer loans interest rates should come down.


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