| Followers | 680 |
| Posts | 141062 |
| Boards Moderated | 36 |
| Alias Born | 03/10/2004 |
Tuesday, June 14, 2011 12:26:15 PM
"U.S. Corporate Bonds: Supported By Strong Balance Sheets"
* Tuesday, June 14, 2011
The overall credit quality of the non-financial corporate sector remains on an improving trend, despite an escalation in share buyback activity.
The retrenchment of the non-financial corporate sector continues uninterrupted. Federal Reserve flow of funds data show that corporate margins and earnings continued to improve in the first quarter of 2011. Interest expense declined even as the overall debt levels edged higher. As a result, non-financial corporations have added more cash to their already flush balance sheets. Also, free cash flow declined slightly during the quarter but remains very high from a historical perspective relative to the overall debt load. Share buyback activity has accelerated in 2011, and has reached a rather healthy pace compared with previous expansions. Even so, our Corporate Health Monitor moved deeper into improving health territory during the quarter, providing a firm signal that the overall credit quality of the corporate sector remains on an improving trend. Bottom line: Our U.S. Bond Strategy service maintains a constructive view on corporate bonds, with an overweight allocation to investment grade issues relative to the Treasury curve. We are tactically neutral on high-yield, however, as a short term hedge against a further deterioration in the U.S. economy.
http://www.bcaresearch.com/public/story.asp?pre=PRE-20110614.GIF
George.
Click on "In reply to", for Authors past commentaries.
* Tuesday, June 14, 2011
The overall credit quality of the non-financial corporate sector remains on an improving trend, despite an escalation in share buyback activity.
The retrenchment of the non-financial corporate sector continues uninterrupted. Federal Reserve flow of funds data show that corporate margins and earnings continued to improve in the first quarter of 2011. Interest expense declined even as the overall debt levels edged higher. As a result, non-financial corporations have added more cash to their already flush balance sheets. Also, free cash flow declined slightly during the quarter but remains very high from a historical perspective relative to the overall debt load. Share buyback activity has accelerated in 2011, and has reached a rather healthy pace compared with previous expansions. Even so, our Corporate Health Monitor moved deeper into improving health territory during the quarter, providing a firm signal that the overall credit quality of the corporate sector remains on an improving trend. Bottom line: Our U.S. Bond Strategy service maintains a constructive view on corporate bonds, with an overweight allocation to investment grade issues relative to the Treasury curve. We are tactically neutral on high-yield, however, as a short term hedge against a further deterioration in the U.S. economy.
http://www.bcaresearch.com/public/story.asp?pre=PRE-20110614.GIF
George.
Click on "In reply to", for Authors past commentaries.
Join the InvestorsHub Community
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
