Turning off the tap

Corporate bond issuance in the forthcoming year is likely to start off strongly, but the pipeline looks set to dry up if, as many analysts expect, the Fed hikes interest rates. Laurence Neville looks at the factors affecting issuance in 2004

The credit markets will begin the New Year much as they ended last year, with tight spreads and high demand. “January is likely to open strongly. That should set the tone for the year,” says Wylie Collins, managing director, debt capital markets at Merrill Lynch. In each of the last two years, bond issuance has been front-loaded, with around a third of bond issuance occurring in the first quarter of the year. That trend is likely to be exaggerated this year as issuers look to