Bring the buyer back

Question: What's driving the strong demand for corporate bond issuance this year?

Karen Manna: Corporate bonds are priced off of a reference rate, for us in the United States, that's the U.S. Treasury. And we quote that as a spread to the Treasury. While those spreads are at fairly tight levels for investment-grade corporate bonds, somewhere between 90 and 100 basis points over the past couple of weeks, that rate or spread added to the underlying rate creates a coupon. A coupon level now that is hovering, say around 5%, give or take, depending on the credit quality and tenor on the bond. We haven't seen levels like that on U.S. treasuries or corporate bonds in almost 15 years, dating back to the Great Financial Crisis. So with corporations with sound credit fundamentals and a period of time where the Fed is more likely to ease, or cut rates, than to increase, we see a great attractive option for corporate bonds, and that's what's been bringing the buyer into the corporate bond market.