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GFI Group director of sales and trading John Spallanzani on companies tapping into the bond market.
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Thank you up next all right I'm skip the banks guys US companies US companies are issuing bonds to finance their growth and operations Johns -- GFI group is here John awful lot of fear out there today in fear of Europe.
But you're spotting a trend where US companies are borrowing -- -- -- the cheapest rates in decades.
Yeah we're seeing a lot of US companies that we're tapping the US markets now go to Europe.
The -- two years two year yield today was at zero.
Percent the the ten year German yield was that won't point 2% so the ability.
Tap into that bond market has been it's been very strong recently -- well as the -- going down means that you the debt they have to pay back currently.
Will be obviously lesson.
Also it's like actually a double good of -- interest -- -- super low and then that that what they're paying it back is ever cheaper is the Euro weakened quite so let's.
Run -- -- your company's Caterpillar.
You like -- like those bonds go ahead.
Caterpillar came out and issued -- point five billion dollars worth of bonds.
That was about fifty to -- five basis points over swaps.
So that was very beneficial mechanical skills and -- companies like you TX which is also issuing issuing bonds.
That's -- pay for mergers so either they're doing dividends buybacks or merger activity and the use in the capital markets in these low rates.
Both the United States and in -- -- what's happened to.
Those via via the need for okay triple raided their -- read read -- basic and Philip Morris and other spread tobacco around the world there and also get some cheap debt.
-- -- is another one as well yes -- us when and they tap the market for about two and half billion dollars worth of European debt.
You know there's not really a lot of places to put your money and not everybody wants to -- in German bunds or -- France and the other peripherals obviously.
Above 6% in now Spain.
It really is five point 9% and -- so what happened degrees and they don't wanna be another Greece where yields.
Ten year yields spiked over 2.5 percent so.
The the fact of the matter is that if you're multi national corporation that's a good balance sheet -- AAA rated you -- -- debt cheaper than most of the sovereigns and Europe -- right.
He also like Ford and Eastman Chemical for similar reasons they've also -- the European markets for up for some really cheap corporate.
Corporate bonds now we had a guest on -- few weeks ago who argued that this same type of them bounce we'll come to the US soon.
That corporates at some point we'll end up being able to traded lower rates -- even government treasuries as investors doubt the US government.
Can pay back its bills do you think we'll ever see like that anything like that come -- US job.
Well I think I think that treasuries will always have a better -- US corporates is because the the fact that the there's the power the printing press in the ability to the -- to to print as much as they want and and the treasury as well also I don't think.
We'll ever see today we're corporates.
Will will be lower than treasuries -- you know you can never say never as what's going on Arnold.
Very good nicely done thank you John -- -- yeah.
