US corporate bond sales surge as market rallies
Source: Reuters - October 3, 2007
October 2007

SCM Advisors' Portfolio Manager Robert Bishop was quoted in an article by Dana Aubin on signs that demand for company debt is rising as the credit squeeze wanes.

Quoted from Reuters:

Though nonfarm payrolls fell in August for the first time in four years, a rebound in the Institute for Supply Management's employment measure on Wednesday sparked talk that Friday's payroll report could show a turnaround.

Assuming the payroll number does not unsettle the markets, "you should definitely see more supply," said Robert Bishop, portfolio manager for SCM Advisors in San Francisco...

New deals are not coming with the generous yields seen in recent months, however. While companies offered as much as 30 basis points of extra yield to attract buyers during a credit squeeze this summer, those concessions have fallen sharply.

"The concession has almost disappeared from a lot of these deals," said SCM's Bishop.

FPL Group's Florida Power & Light Co. was expected to price $300 million of 10-year notes at about 108 to 110 basis points over Treasuries on Wednesday, but saw enough demand to reduce that to 100 basis points, said Bishop, who declined to participate in the deal.

"We've been participating pretty heavily in the new issue calendar, and it's worked out well for us," Bishop said. "If they continue to eliminate concessions and tighten spreads, though, we're going to back away. We've backed away from quite a few deals in the last few days."

"People tend to invest through the rear view mirror," said Bishop. "Investors have seen deals come at significant concessions and then tighten a lot, so everybody decided it's OK to go back in the water."

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