Global Investing

Government-backed lending programs around the world have sparked a revival in financial and corporate borrowing — for now. Worldwide sales of corporate bonds rose to $251 billion in January, the highest level since May 2008, marking the first signs of a thaw after a long global capital markets winter. The following are the global sales totals and a list of the biggest borrowers, according to Thomson Reuters data.

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Top Temporary Liquidity Guarantee Program
(TLGP) Issuers Ranking Issuer Name Proceeds (USD) Market Share 1 BANK OF AMERICA CORP 32,628,557,500 23% 2 GENERAL ELECTRIC CAPITAL CORP 21,045,031,500 15% 3 CITI 17,726,150,000 12% 4 JPMORGAN CHASE & CO 16,176,202,500 11% 5 MORGAN STANLEY 14,324,084,000 10% 6 GOLDMAN SACHS 13,558,528,800 9% 7 WELLS FARGO & CO 5,996,490,000 4% 8 AMERICAN EXPRESS BANK FSB 5,247,235,000 4% 9 REGIONS BANK 3,497,682,500 2% 10 PNC FUNDING CORP 2,896,760,000 2% 11 SUNTRUST BANK 2,743,940,000 2% 12 HSBC USA INC 2,673,895,750 2% 13 JOHN DEERE CAPITAL CORP 1,995,380,000 1% 14 SOVEREIGN BANCORP INC 1,597,932,500 1% 15 KEYCORP 1,499,050,000 1% 16 NEW YORK COMMUNITY BANCORP INC 601,626,380 0% 17 ZIONS BANCORPORATION 254,892,000 0%

Corporate and Government Guaranteed Debt – Global Month Global Corporate Debt US Guaranteed Debt (TLGP) International Guarenteed Debt Total January 2007 317,575.6 317,575.6 February 2007 254,769.1 254,769.1 March 2007 315,515.9 315,515.9 April 2007 197,842.8 197,842.8 May 2007 336,817.1 336,817.1 June 2007 320,097.3 320,097.3 July 2007 123,559.2 123,559.2 August 2007 135,911.7 135,911.7 September 2007 221,778.5 221,778.5 October 2007 260,642.5 260,642.5 November 2007 156,442.8 156,442.8 December 2007 117,873.8 117,873.8 January 2008 203,028.2 203,028.2 February 2008 155,728.7 155,728.7 March 2008 147,390.8 147,390.8 April 2008 303,897.8 303,897.8 May 2008 357,243.5 357,243.5 June 2008 219,317.5 219,317.5 July 2008 133,174.8 133,174.8 August 2008 125,650.0 125,650.0 September 2008 106,030.8 106,030.8 October 2008 68,402.9 4,869.0 73,271.9 November 2008 116,849.8 20,079.9 9,955.9 146,885.6 December 2008 102,066.7 87,768.5 4,050.5 193,885.7 January 2009 251,013.0 46,493.8 19,665.9 317,172.7

Equities may be having a stop-start kind of month, but investors do seem to be more willing to take on risk than before. The latest numbers from EPFR Global, a tracker of investment flows, show high-yield bond funds raking in the money in the second week of January. A net $766 million flowed into the HY funds tracked by the firm. At the same time, a net $578 million flowed into U.S. municipal bond funds.

The drive behind these flows is a mix of a desperate search for yield and a belief that the risk might well be worth taking. Investment grade corporate debt is considered to be priced at Armageddon levels. That is, the price assumes too much trouble ahead than is likely. This has led, for example, to a monthly record in new bond issuance in January in Europe.

High yield is not pricing in quite as extreme a default rate from a historial perspective. But it is still evidently attractive, hence $3.38 billion in global net inflows over the past seven weeks.