Light at the End of the Tunnel

The first morsel of light poked through the darkness today.  It was reported on CFO.com that the bond market is showing signs of thaw.  According to the article, a "number of energy companies this week tapped the slowly thawing fixed-income market."  One such company, Nabors Industries Inc., an offshore and onshore drilling company, raised $1.125 billion in senior unsecured notes due in 2019.  What is encouraging is that the coupon rate is 9.25% while the bond is expected to yield 6.76%, impying the bond is priced at a premium.  

What is also remarkable is that the company was downgraded to a BBB-plus rating from an A-minus as a result of the added debt, meaning that this company was able raise a significant amount of capital at a premium price while being considered a lower-medium investment grade.  This was just one example among a number of others that have been able to tap into the bond market at premiums over par though not being considered high investment grade.   

These are promising developments, though by no means sure signs of relief, they do indicate that there is appetite in the market.  It should be noted that these are striclty energy companies, which generate revenue from a commodity that has a price right now that is unanimously considered to be poised for significant appreciation, namely oil.   But what is encouraging is that there are pockets of optimism brewing.