Refunding to hit $258 bln In the US, S&P says

In 2008, $206 billion of investment-grade debt will mature, and $195 billion will mature in 2009, according to an article published by Standard & Poor’s. The report, titled “Refunding Outlook For U.S. Corporate Bonds: Maturities Increase In 2008 (Premium),” says that for speculative-grade debt, $31 billion will mature in 2008 and $47 billion in 2009.

“In total, maturities should be up approximately 14% over last year. Refunding pressures due to maturing bonds will pick up over the next few years, with 2011 through 2014 experiencing exceptionally high volumes of maturing bonds,” said Diane Vazza, head of Standard & Poor’s Global Fixed Income Research Group. “We expect that investment-grade maturities will average $156 billion a year and speculative-grade will average $92 billion a year between 2011 and 2014, based on our current maturity calendar. Maturities should spike in 2011, as a glut of bonds mature that were issued during the issuance bubble in 2001.”

U.S. corporate bond issuance set records in 2007, with just over $1 trillion in rated issuance. A record $136.6 billion in high-yield and $913 billion in investment-grade bonds was issued in 2007. However, the high-yield market has slowed considerably since the summer, and we expect new deals to remain fairly light in the first quarter of this year, as investment banks focus on moving bonds and loan commitments from last year off their balance sheets.

Ms. Vazza added, “Consumer discretionary will face the most speculative-grade refunding pressure, with close to $9 billion in bonds maturing this year. The slowing economy will increase the credit risk in this sector, and if consumer spending slows considerably, expect credit quality to decline and relative refinancing costs to increase.”