Credit Markets Show Signs of Thawing

Monday’s announcement that Cisco successfully raised $4 billion at low interest rates is another sign that the credit markets are beginning to unfreeze.

Since the beginning of the year, investment grade U.S. companies have raised over $78 billion in the credit markets without any help from the governent according to the Wall Street Journal and research firm Dealogic.  The pace has picked up from the fourth quarter of 2008 when the average was $21 billion of new, nongovernment-backed debt per month.

The iBoxx $ Investment Grade Corporate Bond Fund (LQD) has outperformed equities over the past two months, finishing up 10% since the beginning of December while the SPDR S&P 500 (SPY) fell over 7% in the same time period.  LQD invests in a fixed number of highly liquid investment grade corporate bonds.

Non-investment grade bonds are also seeing more interest.  The SPDR Barclays Capital High Yield Bond ETF (JNK) was up 15% from the beginning of December to the end of January.

For a complete listing, see the Fixed Income ETF Directory.