Credit market conditions thawing says Fidelity’s Spreadbury

The flood of corporate debt issuance seen in the first weeks of 2009 should be taken as a sign of thawing credit conditions, according to Fidelity’s Ian Spreadbury.

In Europe, the US and the UK, companies have raised hundreds of billions and estimates suggest January saw the greatest issuance in any one month since records begun.

Spreadbury, who runs a host of government and corporate bond funds for the asset manager including the Fidelity Sterling Bond fund, believes the explosion of debt is partly due to ‘pent-up demand’. He also notes asset allocation towards fixed income has increased.

He said: ‘There was pent up demand and the latter part of last year was hard. Banks are reluctant to lend so companies are coming to the market and successfully getting deals away. That’s encouraging for the corporate bond market.’

Corporate bond funds – just as the market itself – have been blighted with liquidity problems over the past year but Spreadbury reports fund inflows which he has been directing towards European and US markets.

He said: ‘We’ve been getting cash inflows generally and we’ve been taking advantage of the high issuance volume. The pricing of the new deals was very attractive, some 50 basis points wider to second market.’

Spreadbury points to Imperial Tobacco as an example of recent and successful issuance of debt.