Investment grade issuance for January came in at $55.5 billion, which was at the high end of analysts' estimates. Supply has been primarily concentrated in higher quality names, with AAA and AA borrowers accounting for over 2/5 of year-to-date issuance. Lower-rated borrowers have disappeared from the calendar in the past two weeks as post-Enron accounting concerns have increased spread volatility significantly in the BBB ratings bucket. The roller-coaster ride in Tyco spreads and the sell-off in Williams, WorldCom and other affected credits deterred any but the highest rated issuers from accessing the markets. That said, prior to the last two weeks the high yield calendar was very robust, with almost $9 billion in junk-rated issuers tapping the market. The Investment Company Institute released its preliminary figures for 2001 flows, which came in roughly in line with expectations. For the first time since 1998, flows into taxable fixed income bond funds exceeded flows into stock funds. The total for bonds for the year was about $75 billion compared with $33 billion for equities.
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