Bond investors are looking over their shoulders at Europe’s financial troubles and feeling the same jitters that have driven U.S. retail stocks down in recent weeks.
The S&P Retail Index fell 0.4 percent, or 1.79 points, Monday to 434.61 after falling 4.1 percent last week. The Dow Jones Industrial Average was down more severely, retreating 1.2 percent, or 126.82 points, to 10,066.57, adding to its 4 percent loss last week.
Investors remain fixated on the European financial crisis and the uncertain strength of the U.S. recovery.
And traders have been in much the same funk in the bond market, where weakness makes life harder for retailers trying to raise funds for general corporate purposes, to pay down debt or fund an acquisition.
Last week, J.C. Penney Co. Inc. sold $400 million in senior notes due 2020 and already that debt is being traded below par.
Rosemary Sisson, director and debt analyst at Knight Libertas, noted the bonds, which sold at a spread of 225 basis points, were now trading at 250 basis points, meaning it would cost the retailer more to get the same amount of money from the market this week.
“They’re basically saying, ‘We bought it too rich,’” Sisson said of investors. “J.C. Penney walked away with a good deal.”
And Penney is a desirable name since it doesn’t issue debt often and has about $3 billion of cash on its balance sheet, Sisson said.
“The bond market is concerned about what’s going on globally, particularly in Europe and how contagion could affect our market,” Sisson said. “A lot of investors are just uncomfortable. They don’t feel like taking more risk.”
Shares of Penney fell 1.2 percent to $27 Monday.
European investors pushed the FTSE 100 up 0.1 percent to 5,069.61, while the CAC 40 remained virtually flat at 3,430.93 in Paris and the DAX fell 0.4 percent to 5,805.68 in Frankfurt.
The Hang Seng Index rose 0.6 percent to 19,667.76 in Hong Kong, though the Nikkei 225 fell 0.3 percent to 9,758.40 in Tokyo.
@margotrobbie steps out onto the red carpet wearing @miumiu. The actress is nominated for “Outstanding Performance by a Female Actor in a Leading Role” in “I, Tonya” at the #SagAwards. (📷: Stewart Cook) #wwdfashion
For @massimogiorgetti of @msgm, the Nineties are his favorite decade. “They had a huge impact on my personal growth. What I like of the Nineties is that they are not so precise in terms of style as other decades…there was actually a bit of everything,” he said. As seen on MSGM’s Spring 2018 show: tie-dye and a bit of grunge, two styles that are synonymous with the decade #wwdfashion #wwddecades (📷: @kukukuba)
Breaking News: @hedislimane joins @celine as its new artistic, creative and image director. One of fashion’s preeminent image-makers and trendsetters, Slimane is to join the LVMH brand on Feb. 1 and unveil his first fashion proposition for men and women next September during Paris Fashion Week. It marks a major homecoming for Slimane, who cemented his reputation – and influenced men’s tailoring for more than a decade – as the designer of Dior Homme between 2000 and 2007. He went on to reinvent and ignite the house of Yves Saint Laurent, which he rechristened Saint Laurent, between 2012 and 2016 – all the while maintaining a close relationship with the Arnault family, which controls LVMH and Dior. Read the full exclusive story on WWD.com. Link in bio. #wwdnews #wwdfashion
“Personally I believe the Eighties have been the richest and more vivacious period for international fashion,” Giorgio Armani said when asked what his favorite decade of fashion is. It was a moment of disruption and experimentation and only thinking back to the first years of that decade is always an emotion for me, for what they have meant to me and my work.” The influence is clear in @giorgioarmani spring 2018 collection, pictured here, which was full of bright colors and unexpected prints. Read more about which decades designers loved most on WWD.com #wwdfashion #wwddecades (📷: @aitorrosasphoto)
For Lady Gaga’s only Italian show on her “Joanne World Tour,” the singer wore a range of @versace_official outfits. The standout piece: this custom-made bodysuit inspired by the brand’s spring 2018 collection. #wwdfashion (RG: @ladygaga)
@_camillaruth_ is expanding on the wellness-craze concept with @westbourne – a new NYC restaurant that’s both a healthy-minded café as well as a business that gives back to the community. Marcus works with the Robin Hood foundation to give back to The Door, a non-profit providing youth development services, and also hires employees through The Door. Read our full interview with Marcus on giving back through food on WWD.com. #wwdeye (📷: @lexieblacklock)