US CORP BONDS-Spreads tighter as Greece worries fade
Reuters News, 2 March 2010
U.S. corporate bond spreads tightened on Tuesday as optimism that Greece is close to a financial aid deal with the European Union encouraged risk-taking.
Spreads tightened by 1 basis point to 3 basis points overall, traders said, while the cost of protecting U.S corporate debt with credit default swaps was steady.
The main index of investment-grade credit default swaps stood at around 88.5 basis points, unchanged from Monday, according to Markit Intraday.
"With the market starting to price in a resolution to the Greece issue, (corporate) bonds are grinding tighter today," said Richard Lee, head of fixed income at broker-dealer Wall Street Access in New York.
Greek Prime Minister George Papandreou said his country was fighting for survival against bankruptcy and urged civil servants and pensioners to accept sacrifices to save the debt-burdened nation.
The Greek debt crisis has kept U.S. financial markets on edge for most of the year, with many fearing the situation could spread to other EU countries and possibly beyond.
But with confidence returning, new junk bond deals posted their busiest February on record, with $15.8 billion of new issuance and more sales on the way, strategists said.
Eastman Kodak, GMAC, McClatchy Co and Reader's Digest were among companies that took advantage of renewed appetite for risk.
On Tuesday, privately owned healthcare services provider HCA Inc [HCA.UL] was in the market with a $1 billion 10.5-year bond sale. Guidance on the deal's coupon was around 7.375 percent, said IFR, a Thomson Reuters service.