Corporate Bond Sales Show Signs of Picking Up

In a sign that the corporate debt market may be stabilizing, companies are on track to sell $13.65 billion in bonds this week, including $3.76 billion sold on Tuesday--the most in one day since June 18.

The offerings come after corporate bond sales slowed in July to $16.18 billion--the lowest monthly total since March 1995--amid concerns about companies’ accounting and weak profit growth. With benchmark borrowing costs near all-time lows, some companies are taking the opportunity to raise cheap capital, and investors are more eager to buy.

Among the issuers Tuesday were Goldman Sachs Group Inc. and Colonial Pipeline Co.

“It’s very much a feast-or-famine world right now,” said Craig Nunez, treasurer of Colonial, which sold $185 million of 30-year bonds. “Maybe we took a risk, but we actually believed that in this market, with absolute yields down where they were and with not much paper coming, that we might be well-received. We guessed right.”

Investors backed away from credit risk last month as the Standard & Poor’s 500 index fell to a five-year low and about $2.8 billion of sales were canceled during the last two weeks of the month.

Companies perceived as safer investments are among those finding demand for their issues. For instance, Gillette Co. and Procter & Gamble Co., established companies selling well-known products, were able to attract investors at the end of July. Regional banks are another industry perceived as safe.

With benchmark interest rates so low, some companies want to sell. The 10-year Treasury note yield reached an all-time low of 3.96% during intraday trading Aug. 14, one day after the Federal Reserve decided to hold its key interest rate steady at a 41-year low of 1.75%.

Hedge Funds Inflow Falls 18% in 2nd Quarter

Hedge funds attracted a net $4.57 billion in the second quarter, down 18% from the first three months of the year, Tremont Advisers Inc. said.

Money coming into hedge funds, private partnerships for wealthy individuals and institutions, may slow further in coming months if the funds continue to post lackluster returns. Overall, hedge funds have lost 0.03% this year, according to the CSFB/Tremont Hedge Fund index.

Their performance through July was better than the 20.7% drop in the Standard & Poor’s 500 index, but many investors expected hedge funds to make money this year because they can bet on falling as well as rising prices.

“Some investors are saying ‘I expected better,’ ” said Kevin Ferro, head of Ferro Capital. He said some hedge funds had successful fund-raising in June and July, and others faced redemptions.

Total hedge fund assets are estimated to be about $550 billion. The funds took in a total of $10.2 billion in the first half, compared with $31 billion for all of 2001.

Bloomberg News

*

SEC to Vote Next Week

on Filing Deadline

The Securities and Exchange Commission will decide next week whether to override corporate opposition and approve a rule to speed up companies’ financial disclosures.

The SEC said it will vote Aug. 27 on the rule. It would require quarterly earnings reports to be filed within 30 days of the end of the quarter rather than 45 days. Annual reports would have to be made within 60 days of the end of the fiscal year instead of 90.

SEC Chairman Harvey Pitt, under pressure from Congress and investors, has called for fuller, faster disclosures to protect stockholders from the kind of accounting failures that led Enron Corp. to file for bankruptcy last December.

More than 50 Fortune 500 companies have objected, saying tighter deadlines will lead to erroneous and incomplete reports.

Bloomberg News