Sunday, January 02, 2011 8:29 PM

First Time On Record US Credit Spreads Drop Below Global Corporate Debt; Thoughts On Relative Value

The love affair with US corporate bonds continues unabated. Please consider U.S. Yield Spreads Fall Below Rest of the World http://noir.bloomberg.com/apps/news?pid ... Np_Y3hPQlI

For the first time on record, investors are demanding a smaller premium to own U.S. corporate bonds than global company debt.

Bondholders require 166 basis points more yield to hold U.S. investment-grade company debt instead of Treasuries, compared with an average 169 basis-point spread worldwide, according to Bank of America Merrill Lynch data. At the height of the credit crisis in December 2008, companies had the disadvantage of having to pay about 150 basis points more to lure U.S. investors to their bonds than borrowers seeking buyers elsewhere in the world.

“With the strong stimulus package and QE2, I expect 2011 to be a relatively strong economy and corporate bonds tend to do pretty well in that environment,â€