One of the dominant themes this year will be the focus on providing shareholder value, even if it comes at the detriment of bondholders.
Last week was relatively quiet in the bond market, as secondary trading was muted and new issue volume declined as we entered earnings season. The Morningstar Corporate Bond Index was unchanged for the week at +136 over Treasuries.
Investors complained that they had a hard time sourcing bonds, as demand from mutual funds--which are flush with cash from inflows--outstripped new issue supply and dealer desks were low on inventory. Even in the face of this demand, investors are experiencing a little sticker shock and were unwilling to push credit even tighter. Spreads remain at the tightest levels since the credit crisis.
David Sekera does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.