Strategists at JPMorgan Chase & Co. lowered their recommendation on U.S. investment-grade corporate bonds to neutral from overweight, saying that uncertainty about Europe’s fiscal crisis will limit returns for the debt.
GFI Group Inc. , which matches securities and derivatives trades between banks, may sell notes as the lowest interest rates on investment-grade debt in at least 23 years allow companies to pare debt payments.
Banks and money managers are having a tougher time trading corporate bonds in large sizes and older issues as Europe’s sovereign debt crisis limits risk-taking, according to JPMorgan Chase & Co. strategists.
Bill Gross, Jeffrey Gundlach and Dan Fuss, whose firms collectively oversee about $1.5 trillion, expect the Federal Reserve to conduct a third round of bond purchases as signs of strength in the U.S. economy fade and Europe’s sovereign-debt crisis returns.
Bond managers from Pacific Investment Management Co. to Neuberger Berman Management LLC are sticking with bets that U.S. banks will withstand a European crisis that’s triggered the biggest losses since early 2009.
Investors surveyed by JPMorgan Chase & Co. are the most bullish on investment-grade bonds in more than nine years as they demand the least relative yields since the start of the financial crisis. Arch Coal Inc. plans to raise $300 million in a private offering of secured notes.
Otter Tail Corp., the provider of energy and electricity services in the Midwest, plans to sell debt as soon as today after corporate yields rose for the first time in nine months relative to government bonds.