Bond Market Slams Shut With Spreads Widest in 10 Months: Australia Credit Bloomberg

25.08.11

The market for new bond sales in Australia by non-financial companies has frozen as Europe’s debt crisis and concern the global economy is faltering drives yield premiums to a 10-month high.

There hasn’t been an offering of such debt since a local unit of Volkswagen AG sold A$150 million ($157 million) of notes on July 8, compared with more than $45 billion of investment- grade non-financial bonds offered in the U.S. since then, data compiled by Bloomberg show. Australia’s slowest third quarter since 2008 follows A$4.6 billion of issuance in the six months to June 30 as Westfield Retail Trust (WRT) and Woolworths Ltd. led the busiest first half since 2007, the data show.

“We’re in a much higher volatility environment and unless issuers are desperate, there’s no reason to pay up to issue right now,” said David Carruthers, a senior money manager at AMP Capital Investors Ltd. in Sydney, which has about A$30 billion of fixed-income assets under management. “I think there would be demand for new deals but it’s not going to be as strong, because investors are being more cautious about how they spend their money.”

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