Bond sales have fallen to their lowest point in a decade due to continued concerns over just how far the European sovereign debt crisis will drive up borrowing costs.
Borrowers issued $66.1 billion of debt in currencies from dollars to yen, a third of April’s tally and the least since December 2000, according to data compiled by Bloomberg. The news service reports at least 14 companies withdrew offerings, including New York-based retailer Jones Apparel Group Inc. and theater chain operator Regal Entertainment Group.
While concerns over the situation in Europe would dictate a “flight to quality,” which includes bonds, the news indicates the exact opposite is happening. Not so, says Don Mykrantz, head of fixed income with MFS Investment Management.
“What you’re seeing is a flight to quality from high-yield fixed income products, which makes sense,” he explains.