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Rehling: Corporate Issuance Will Remain Strong

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    Wells Fargo chief fixed income strategist Brian Rehling on demand for fixed income.

  • Duration 4:34
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-- -- -- Now let's keep this -- a live here.

You -- Dennis talk about this -- of low interest rates and quantitative easing more more corporations are setting up their old high interest debt to refinance.

So let's get more on a growing trend with that Bryan railing -- chief fixed income strategist at Wells Fargo and please welcome.

Came back to our show -- welcome to you you just -- our colleague Dennis he'll outline the story Disney and house refinancing the Disney Paris debt.

This is Bernanke's intention with this open ended accommodation -- third round of quantitative easing is it not.

Well I think it helps some of its -- the sole intention but clearly.

It's -- I mean clearly it's allowing.

Companies to refinance our -- -- all time low levels so in the demand for fixed income.

-- remains strong.

-- is high and it's interesting to me.

That debt buyers are willing to accept this low coupon.

That's interesting to me as well but.

I clearly there are a lot of investors that continue.

To search out fixed income you continue to see the flows into fixed income and out of equities if you look at the fund flows which is still.

Quite remarkable -- my with of -- -- well I think people are fearful number one and first and foremost people are still scared.

Uncertain future.

And so you know they're they're chasing returns fixed incomes had a great run I mean just the last couple years it's done well be looked past the last thirty years.

It's been a good place to have assets so I think people are looking towards that trend kind extrapolating that into the future.

And in addition the Fed now you know taking bonds on the market buying more bonds that is.

You know all that demand going hunting for fewer insure bonds.

For months -- months months Brian people investors are telling us they'd loved corporates.

Corporate debt because the yields you know the corporate spreads were just -- historically.

High levels are -- so profit why did you see the spreads coming in now or at at at you know what's what's the path.

Yeah I mean the spreads have come -- across the board over the year.

You know there though those sectors have been the best performing sectors.

You know the credit sectors corporates high yield has been a place to be this year.

You know going forward.

There could see spreads -- a little -- I mean we're not at historically tight spread levels even though were at its all time low yield levels so.

You continue to see those spreads -- a -- but.

You know there's not quite the upside going forward as we saw in the past but still you can -- -- better returned in corporates and can treasuries.

It's it's really interesting right sign of the times so what's your forecast for corporate issue -- I think it corporate is that issuance will remain strong and in this go the refinancing activities kind of it's a slam dunk for most industry issuers his ads.

You know -- -- to the balance sheet.

-- you also see issuers doing opportunistic financing so maybe issuing bonds.

I even if they don't have.

You know somewhere to put the proceeds that is putting out in the balance sheet for.

More opportune times in -- also starting to see issuers issue bonds tended to buy stock.

These all time low levels.

There can be a nice pop for the equity holders but I would start to see that type of activity.

Your debt hole there right -- should cause little -- laws.

Let me get this in your latest note infinity and beyond quoting buzz light -- -- Democrats are celebrating their ballot.

I talking about the ramifications of QE3 and specifically its impact on fixed income investments can come a little bit about that some of your your ideas -- definitely got into a little bit with with the -- this discussion but.

Some more ideas please if you -- -- I mean obviously I think who this -- -- some -- dobbs here the new quantitative easing quantitative easing infinity because there is no end date.

Could even see the Fed increased the monthly purchases if need be so kind of a playoff of that but you know in the short term.

The Fed easing is going to be positive for the -- sectors -- in fixed income that's.

High yield corporates.

You know longer term we have -- far greater concerns.

About the you know inflationary impacts of quantitative easing and -- in the feds are taking but.

You know that's well out and the future for five years down the road but we -- caution investors as you -- outlook for these corporate bonds.

You know -- -- look cautious here in terms of the duration you know we don't wanna be locking in.

He's all time low yields for the next twenty or thirty years in.

-- -- environment that the Fed is trying to introduce some inflation into the picture.

Yes well said Bryan railing thanks for joining us today.

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