Missing link

Banks are unable - or unwilling - to hold bond inventory for resale in the secondary markets, meaning that their traditional role as middleman in the buying and selling of bonds is not being fulfilled. William Rhode looks at whether things will continue in this fashion, or if the surge in primary issuance signals an eventual return to fully functioning debt markets

February 18 marked a new record for primary market issuance in the US, with $32 billion worth of bonds issued in a single day. "There is no doubt about it," says Ross Junge, a portfolio manager at Aviva Investors in Des Moines, Iowa, which has $469 billion in assets under management worldwide. "Investors can't get enough of corporate debt right now."

The reasons for the attraction are obvious. Unable to borrow from banks, cash-strapped corporates are being forced to sell bonds offering investors