Signs the global economic recovery is faltering and Europe’s fiscal crisis is spreading added to investor concern that banks will have difficulty in clawing back the $2.4 trillion they’re owed by that region’s most indebted nations.
Petroleo Brasileiro SA, which sold a combined $13 billion of bonds in the first quarters of 2011 and 2012, is holding off on issuing new debt as borrowing costs rise to the highest in two years versus investment-grade peers.
Company bonds will rally throughout 2010 as cash-rich European investors seek out riskier assets on optimism a sovereign default has been avoided and that banks are now able to fund themselves, according to Barclays Capital.
The cost of insuring against default on European corporate bonds fell for the first time in four days after Germany and the International Monetary Fund pledged to speed up efforts to overcome the Greek fiscal crisis.
European Union finance ministers and central bank heads will discuss whether government debt ratings “are necessary” as well as proposals to require more transparency on the assessments at a meeting tomorrow.