The Markets December 31, 2008

Credit Crisis Cuts into Bond Sales

U.S. bond sales and asset-backed securities issuance were down sharply in 2008 amid the global credit crisis.
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U.S. investment-grade bond sales fell to $645 billion from $986.8 billion in 2007, according to Thomson Reuters data, and U.S. junk bond sales fell to $37.2 billion in 2008 from $135.6 billion in 2007.

J.P. Morgan Chase & Co. was the lead bookrunner for high-grade sales in 2008, followed by Citigroup, the data showed, according to Reuters. JPMorgan Chase also was lead bookrunner in junk bond sales, followed by Banc of America.

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Meanwhile U.S. asset-backed securities issuance tumbled by 82% to $159.8 billion this year compared with a robust $898 billion sold in 2007, according to Thomson Reuters. In the final quarter of the year, ABS supply totaled a mere $3.6 billion, compared with $106.3 billion in the prior year, as liquidity dried up and issuer financing costs soared, according to the report.

JPMorgan Securities was the top ABS underwriter in 2008 with 67 deals totaling $31.1 billion.

Products December 31, 2008

Calvert Launches Government Fund

Investment management firm Calvert has announced the launch of the Calvert Government Fund.
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The Calvert Government Fund (ticker: CGVAX) seeks to provide a high level of current income while preserving capital, primarily through investment in debt securities issued or guaranteed by the U.S. government or its agencies or instrumentalities, according to the firm. It may also invest in futures contracts related to U.S. Government securities.

The new fund adds to Calvert’s taxable fixed-income lineup for a total of nine funds, and is managed by Calvert’s taxable fixed-income team led by Greg Habeeb, SVP and head of the taxable bond division at Calvert.

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“We will apply a relative value strategy, which involves constantly comparing the appreciation potential and attractiveness of the securities held in the fund’s portfolio against those available in the marketplace and will employ an active trading strategy,” said Habeeb. “The fund will provide a low credit risk alternative for fixed-income investors.”

“The portfolio team will manage the fund’s duration and position its exposure along the yield curve to take advantage of market volatility and return opportunities. The portfolio management team applies multiple strategies to adjust the interest-rate sensitivity of the portfolio as market conditions fluctuate,” said Cathy Roy, CIO of Fixed Income at Calvert. “The addition of the fund allows shareholders and their advisers an opportunity to diversify their portfolios for the right mix of income, stability, and growth potential,” she added.

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