Editor’s letter

Global investors have readily embraced what was once considered a domestic axiom: Buy American! (debt, in this case) yet Americans don’t seem as eager to abide by that philosophy.

A couple of interesting phenomena have come to the forefront in the past few months.These phenomena – which US Credit examines in this issue – pose interesting possibilities, in addition to challenging one’s market intuition. Foreign investors, who hold 20% of all US corporate bonds, have embraced the country-music ideology of having friends in low places, and continue to exhibit an insatiable appetite for US corporate bonds, despite a dollar hovering at record lows.

According to the latest data released by the Treasury Department, foreign investors parked nearly $30 billion in the US corporate bond market in November, the second highest monthly volume on record.And all this buying seems to pay no heed to a dollar that, at the end of this past month, was flirting with record lows against the euro.

However, much market sentiment on the domestic front is using the weak dollar as a main argument for not investing in dollar-denominated corporate debt, as bond guru Bill Gross of Pimco publicly argued in January. Regardless of who is right on the currency call, though, one thing will remain certain: finding value at current spread levels will be harder than ever.

Richard A. Bravo, Editor