Dollar Decline Could Actually Narrow Corporate Spreads

Despite a recent back up in Treasury yields on speculation the dollar's fall will spook foreign investors, a weaker greenback may actually bode well for corporate spreads in the long term, according to credit strategists.

  • 03 Dec 2004
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Despite a recent back up in Treasury yields on speculation the dollar's fall will spook foreign investors, a weaker greenback may actually bode well for corporate spreads in the long term, according to credit strategists. They argue a weaker dollar could boost exports and increase creditworthiness among U.S. corporates, in a fundamental long-term trend that should more than offset any drop in demand from foreign buyers.

Kamalesh Rao, economist at Moody's Investors Service, said further weakness of the dollar to $1.40 to the euro could force foreign investors to rethink their investments; the dollar was at $1.33 on Dec. 1. But the lower dollar could ultimately boost corporate balance sheets. "With another 5-10% drop in the dollar, spreads may tighten another five basis points," he said, noting the weaker exchange rate will help U.S. exports.

The dollar's recent freefall comes at a time when foreign demand for corporate bonds is at its strongest ever. Foreign investors bought more than $44 billion of U.S. corporate bonds in September, the highest net monthly purchase ever recorded, according to data from the Treasury. There is no accurate historical precedent to gauge how the dollar's decline will impact foreign investment in corporate bonds because foreign investors have a larger role in the U.S. market than they have ever had.

  • 03 Dec 2004

All International Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Citi 35,941.13 111 8.93%
2 Barclays 31,588.47 86 7.85%
3 JPMorgan 27,799.55 107 6.91%
4 Bank of America Merrill Lynch 27,706.86 75 6.88%
5 HSBC 21,949.38 82 5.45%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 17 Jan 2017
1 Commerzbank Group 114.00 1 66.16%
2 CaixaBank 37.05 1 21.50%
3 UniCredit 10.62 1 6.17%
3 BNP Paribas 10.62 1 6.17%
Subtotal 172.30 3 100.00%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 17 Jan 2017
1 SG Corporate & Investment Banking 770.06 2 16.80%
2 Goldman Sachs 656.16 2 14.32%
3 JPMorgan 527.28 4 11.50%
4 Emirates NBD PJSC 408.38 1 8.91%
5 Deutsche Bank 321.53 3 7.01%