January’s debt-issue activity portends a rush on the markets later this year.
Something seemed rotten in December. Fortnightly’s survey of utility and financial deals for that month turned up so few debt issues, we wondered if our research methods were failing. We found only one significant utility bond issue during the month; Allegheny’s West Penn Power issued $275 million in 10-year notes (see “Post-Holiday Blues,” February 2008). December’s deathly quiet raised questions about whether we were missing most of the deals.
Those worries evaporated in January, when a huge slug of utility debt hit Wall Street. At least 13 utility bond issues went to market, totaling more than $4.7 billion—and billions more entered the pipeline.
This proved our research methods were fine; utility issuers just took an unusually long break in December. But the magnitude of January’s comeback raised some interesting questions about cycles in utility debt markets—and what might be coming in 2008.