Jack Kaskey and Melita Marie Garza

July 6 (Bloomberg) -- Earnings at such companies as Ford Motor Co. andArcelorMittal may continue to decline in the next three months as the highest unemployment in a quarter-century keeps consumers from spending.

The year-over-year profit slide for Standard & Poor’s 500 Index members may narrow to 21 percent from July through September, after a decline of an estimated 34 percent in the second quarter, according to data compiled by S&P and Bloomberg. Earnings may rise by year-end based on comparisons to late 2008, which was roiled by the meltdown in financial markets. Profits dropped more than 60 percent from October through December and about 33 percent in the first quarter of this year.

Consumers in the U.S., the world’s largest economy, remain concerned about jobs after unemployment reached a 26-year high in June, analysts and investors said. Until Americans start spending again on cars, cell phones and clothes, most U.S., Asian and European companies may keep squeezing out costs.

“So long as unemployment keeps rising, the consumer will continue to be very conservative,” said Walter “Bucky” Hellwig, who helps manage $30 billion at Morgan Asset Management in Birmingham, Alabama. “Any improvement will come from cost cutting, and that’s not sustainable. If you have no anticipation of top-line growth -- it will be a little tougher to generate that enthusiasm into the fourth quarter.”

Consumer Confidence

U.S. consumer confidence slipped unexpectedly in June, reflecting unemployment that rose to 9.5 percent and wealth destruction triggered partly by a drop in property values. U.S. employers slashed 467,000 jobs last month, and about 6 million jobs have been eliminated since the recession began in December 2007. June’s jobless rate was the highest since August 1983.

Almost 67 percent of S&P 500 members topped analysts’ estimates for first-quarter earnings after eliminating jobs and closing plants, Bloomberg data shows. That helped the S&P 500 index rally 15 percent in the second quarter, the most since 1998.

The benchmark MSCI Asia Pacific Index surged 28 percent in the quarter, the largest gain since the gauge started in 1988, while Europe’s Dow Jones Stoxx 600 Index rose 17 percent, the biggest advance since 1999.

The second-quarter earnings barrage begins in the U.S. on July 8 with aluminum producer Alcoa Inc., the first member of the Dow Jones Industrial Average to report results. Alcoa is based in New York.

‘What’s Your Potential?’

“The analysts will probably lowball things once again and the companies will be able to jump over it again,” said Charles Smith, chief investment officer for Fort Pitt Capital Group Inc. The Cleveland-based firm has $800 million assets under management. “If the teacher expected you to get a “C-” and you get a ‘C,’ then the question is: what’s your potential as a student?”

Railcar shipments and other U.S. shipping data provide scant hope that manufacturers are gearing up for increased demand, said Mark Demos, a Minneapolis-based portfolio manager who helps manage $21 billion at Fifth Third Asset Management. Railcar shipments are down 19.5 percent so far this year.

Demand is best described by the title of the 1966 novel, “Been Down So Long It Looks Like Up to Me,” said Andrew Bartels, an analyst at Cambridge, Massachusetts-based Forrester Research Inc. Technology purchases in the U.S. will decline 5.1 percent this year, with a recovery in the fourth quarter, he said in a report last month.

Slow Profit Growth

Mountain View, California-based Google Inc., the biggest Internet advertising company, may post its second-slowest rate of profit growth since selling shares to the public. Chief Executive Officer Eric Schmidt said June 30 the economy is bottoming and will be better in a month.

Microsoft Corp., based in Redmond, Washington, may report its second straight sales drop, according to a Bloomberg survey of 22 analysts. Prior to the quarter ended in March, sales at the world’s largest software maker had never declined.

Mobile-phone users are trading down toward lower-priced phone plans that don’t require buying a new handset, said Andreas Mark, a Frankfurt-based fund manager at Union Investment GmbH with about 30 billion euros ($42 billion) of equity assets under management.

Espoo, Finland-based Nokia Oyj, the world’s biggest handset maker, may report a 67 percent slide in net income, analysts estimate, as customers concerned about losing their jobs postponed phone upgrades.

‘Not Hiring Them Back’

“Companies are laying off people and not hiring them back,” said Roger Kubarych, chief U.S. economist at Unicredit Global Research in New York, who forecast payrolls would decline by 450,000. “This leaves us with a weak, irregular recovery.”

Rising unemployment in Europe is trimming as much as 10 percent of industry sales, said Amsterdam-based Simon van Veen, who helps manage a global portfolio of 2.2 billion euros at the Fortis Global High Income Equity Fund.

“The outlook for electronics companies isn’t clearing,” said Tetsuro Ii, president of Commons Asset Management Inc. in Tokyo. “Consumer spending continues to be sluggish in the U.S. and elsewhere, pressuring prices.”

Global sales still will bolster results at U.S. multinational companies, saidMichael Williams, managing director of New York-based Genesis Asset Management, which has assets of about $2 billion. “The struggling U.S. consumer will be more than offset by the massive number of people in China, Brazil, Russia and India that are moving up the consumption ladder,” he said.

Chinese Economic Growth

China’s Purchasing Managers’ Index climbed for a fourth month in June, the latest sign the country’s 4-trillion yuan ($585 billion) stimulus is reviving its economy. China’s economy is forecast to grow 7.8 percent this year, according to a Bloomberg survey. That compares with a decline of 2.7 percent in the U.S. and 4.3 percent in Europe’s 16-nation euro zone.

PetroChina Co., the world’s largest company by market value, and China Petroleum & Chemical Corp., or Sinopec, may post increased second-quarter profit after oil prices rebounded from December lows and China’s economy grew, said Gordon Kwan, head of energy research at Mirae Asset Securities in Hong Kong.

Second-quarter earnings at Exxon Mobil, Chevron Corp. and ConocoPhillips, the largest U.S. oil companies, probably fell after the recession sapped fuel demand, causing crude-oil prices to drop by half from the record set last July.

At Irving, Texas-based Exxon Mobil, net income may drop 64 percent from a year earlier to $4.21 billion, according to analyst estimates compiled by Bloomberg. The profit would be the company’s smallest for any quarter since 2003.

‘Excess Production’

“There’s a lot of excess production and not that much demand,” said Barry R. James, who holds Exxon Mobil, Chevron and ConocoPhillips shares among the almost $2 billion in investments he manages at the James Advantage Funds in Dayton, Ohio. “We don’t see much of a recovery.”

Toyota Motor Corp., Honda Motor Co., Nissan Motor Co., Japan’s three largest automakers, will likely post losses in the three months ended June 30 because of the lower demand in the U.S., traditionally their most profitable market, according to three analysts surveyed by Bloomberg. Honda and Nissan are based in Tokyo, and Toyota in Aichi prefecture in central Japan.

“The numbers will look really ugly,” said Mamoru Kato, an analyst at Tokai Tokyo Research Center in Nagoya, who expects Toyota to post a loss comparable to the 766 billion yen ($8 billion) loss in the quarter ended in March.

Ford Motor Co., the only major U.S. automaker that hasn’t filed bankruptcy, is gaining market share from its distressed domestic rivals, said Brian Johnson, a Chicago-based auto analyst for Barclays Capital.

No One ‘Sneering Anymore’

Ford, based in Dearborn, Michigan, is boosting third- quarter output 16 percent to meet rising demand. Detroit-based General Motors Corp., which filed for Chapter 11 bankruptcy protection June 1, is selling controlling interest in its European operations. Chrysler LLC, which filed Chapter 11 on April 30, has emerged from bankruptcy as Chrysler Group LLC, 20 percent owned by Italy’s Fiat SpA.

“People used to sneer at me for owning Ford, but no one is sneering anymore,” said Bernie McGinn, president of McGinn Investment Management of Alexandria, Virginia, which owns about 300,000 Ford shares. “The market is rewarding them for not going to the government to get money.”

Ford, which had a 33 percent decline in U.S. auto sales through June, may lose $718.3 million in the second quarter, an improvement from an $8.7 billion lossa year earlier, according to the mean estimate of four analysts surveyed by Bloomberg.

U.S. Air Carriers

The nine biggest U.S. air carriers, including Delta Air Lines Inc., American Airlines parent AMR Corp. and United Airlines parent UAL Corp., may have a combined quarterly loss of $1 billion, estimated Michael Derchin, an analyst at FTN Equity Capital in New York. Derchin said he previously expected a $600 million loss. AMR is headquartered in Forth Worth, Texas, and UAL in Chicago.

Delta, based in Atlanta, and American Airlines both plan to trim additional flights when the peak travel season ends after the Labor Day holiday. U.S. carriers have eliminated 31,700 jobs and parked more than 500 jets since the start of 2008 as air travel plummeted amid job losses and tighter credit.

Large banks in general will report lower earnings than in the first quarter, though analysts said companies such as Charlotte, North Carolina-based Bank of America Corp. and New York-based Goldman Sachs Group Inc. will still post profits. Credit losses will offset some gains in trading and underwriting, said Rochdale Securities LLC analyst Richard Bove.

‘Difficult to Decipher’

“You’re going to get a quarter that is going to be very difficult to decipher,” Bove said. “If people look at operating earnings, they’re going to be tremendously pleased with everything associated with the capital markets area, but you also have these losses in the retail banking area.”

Earnings per share will likely decline as many banks sold shares, includingBank of America’s $13.5 billion total, after the government’s stress tests determined 10 of the biggest lenders needed more capital to withstand a prolonged recession. The 19 largest lenders have announced plans to raise more than $100 billion since the stress tests were completed.

In retail, discounters such as Wal-Mart Stores Inc., based in Bentonville, Arkansas, have fared better than higher-priced competitors.

Luxury retailers such as Saks Inc. and Nordstrom Inc. have been among the hardest-hit by the slowdown in consumer spending, said Sarah Henry, an analyst with MFC Global Investment Management. “People are shopping for value, and Wal-Mart’s message is very resonant right now,” she said.

Raw Materials

Sliding consumer demand from the retail sector to manufacturing has ultimately affected raw-materials providers, leaving producers of commodities such as aluminum and chemicals struggling to remain profitable.

Steelmakers are grappling with prices that have yet to rebound after demand plunged the most since World War II. Luxembourg-based ArcelorMittal, the world’s largest steelmaker, may report its third consecutive loss before returning to profit in the third quarter, analysts estimate.

Melbourne, Australia-based BHP Billiton Ltd., the world’s biggest mining company, may report its first profit decline in nine years for the 12 months ended June 30, because of a drop in commodity prices, according to analyst estimates. The Reuters/Jefferies CRB Index of 19 materials has plunged 46 percent in 12 months.

Dow Chemical Co., the largest U.S. chemical maker, may report a second-quarter loss and a 94 percent profit decline in the current quarter, according to analysts’ estimates, as falling demand for paints and plastics prompt the industry to shut factories. The Midland, Michigan-based company announced three plant closures and 2,500 job cuts on July 1.

“There is no pricing power in chemicals,” Fifth Third’s Demos said. “That area is a disaster.”

Adorable eco-friendly 2015 Honda CB 750 bike

Designed by Igor Chak, the 2015 HondaCB 750 comes with four-cylinder liquid hydrogen engine while having a six speed dual clutch transmission as well as traction control. Being powered by hydrogen, this conceptual bike is a zero emission motorcycle. The 2015 Honda CB 750 concept bike is made of carbon fiber, aluminum as well as titanium.
Its cowling structure makes it possible for a bike to ride people amounting up to 300 lbs. It appears to be a computer controlled 2015 Honda CB 750 as it incorporates an on board computer being controlled by a 5 inch OLED touch screen being placed on its fuel tank. The touch screen computer comes with 3 modes: GPS navigation system right between its handlebars, drive modes as well as diagnostics modes.

As far as GPS system mode is concerned, it is standard and is designed to direct you. GPS system is going to be connected to the internet by means of Wi-Fi as well as 3 G. The Drive mode can be electronically arranged to standard, economy or race mode. The Diagnostic mode is for providing the lap times, gas consumption as well as its top speed.

The 2015 Honda CB 750 bike’s front and real suspension which is electro magneticis capable to be electronically tuned. Due to radar technology, it is now possible to prevent head on collisions, reducing the speed of the bike in such situations. The 2015 Honda CB 750 features sensors displaying readouts being updated every 1/10 per second.

The super bike also comes with an ABS system as well as air bag. There is a steering damper designed for better drivability and aerodynamic rims. High speeds do prevent you from some risks due to ABS system. It is great that more green technologies are yet to come with a possibility to one day have more ecologically clean transportation.

2010 Honda Fury bike to vent its fury on the roads

This brilliant bike called 2010 Honda Fury is here to vent its fury on the roads. Stylish riding experience appears to be possible with 2010 Honda Fury while high quality and road performance is guaranteed. This cunning chopper comes with the longest wheelbase produced by Honda being at 71, 24 inches, rake of 38 degree and trail of 3, 5 inches.

This marvelous bike appears to be the most beautiful model offered by Japanesebike builder. First spotted at the IMS show in New York, this charming replica offers a horizontal backbone frame tube, a suspension is front fork shaped and measures 45 mm with 4 inches of travel as well as adjustable shock with 3, 7 inches of travel.

Its pleasing to eye seat has a height of 26, 7 inches allowing an ideal and comfy riding position and suitable for many sizes. This fabulous bike is powered by retrofitted version of powerful 1312 cc V-Twin liquid cooled engine. 2010 Honda Fury bike is available in different colors including blue, matte black and shining silver while includes a thin 21 inches front tire along with 200-series rear tire.

2010 Honda Fury has a 5 speed transmission while using a shaft-drive system. The curved lines of its fuel tank are fascinating wherever it comes in view. Optionally, the street bike can be loaded with windscreen. Wheels have 9 spokes combination while clutch is easily operated. The mirrors are free from blurring. This aggressive street bike is capable of driving at 80 miles per hour.

2010 Honda Fury comes with bright chrome handlebar and is expected to be priced for 12 999 USD. Its valve train consists of 3 valves per cylinder with a front brake to be 336 mm disk along with dual-piston caliper while rear brake is a 296mm disc with a piston caliper. A lot of accessories are customizable including rider seat and passenger seat.

Chrome accessories are chrome Allen bolt inserts of 5, 6 and 8 mm, front chin spoiler, clutch, front chin spoiler LED light kit, throttle and brake as well as outdoor cover

Shower UV lamps

Do you like your skin to be tanned but you do not want to spend time to go to the solarium? Would you like to get tanned while taking shower? Then the following gadget is right for you. The UV lamps that can be installed into your shower will help your skin stay fit and brown. Besides, the UV lamps will stimulate your skin to produce the vitamin D that it needs to stay elastic and healthy. Do not be worrying about the UV light in your shower because this system has two filters not to let you burn your skin. Besides, it has a timer and it shuts off automatically if you take shower for quite long.

That way you are fully protected from the negative effects of the UV light and get a normal dose of it just to help your skin stay healthy. This gadget is both useful and cool and it makes you look better. This system is programmable so that you can choose the program that fits your skin type and your needs. Just install this system in your shower and you will never have to solarium and waste your time lying on the beach.

U.S. Markets Wrap: Equities Rebound on Credit-Market Outlook

U.S. stocks rose, erasing an early slump, as speculation that global credit conditions are improving overshadowed a drop in commodity producers. Treasuries climbed, while the yen and dollar gained against the euro.

Goldman Sachs Group Inc., JPMorgan Chase & Co. and Bank of New York Mellon Corp. helped financial shares in the Standard & Poor’s 500 Index erase a 1.3 percent slide after Moody’s Investors Service said it may lift Brazil’s debt rating. American Express Co. jumped 5.3 percent as Stifel Nicolaus & Co. upgraded the shares, while Philip Morris International Inc. helped lead a gauge of consumer companies to the best advance among 10 groups.

“Recently, anytime the rating agencies make an announcement, it’s to downgrade someone,” said Mark Bronzo, a money manager at Security Global Investors, which oversees $20 billion in Irvington, New York. Given “that they were talking positively about an important emerging nation, people took that as a mild positive,” he said.

The Standard & Poor’s 500 Index rose 0.3 percent to 898.72. The benchmarkindex slid as much as 1.1 percent earlier, led by producers of energy and raw materials, as crude-oil and metal prices slumped. The Dow added 44.13 points, or 0.5 percent, to 8,324.87 after tumbling 75 points earlier.

Treasuries Rise

Treasury two-year notes rose for a third session as the Federal Reserve bought $7 billion in government securities and an auction of inflation-linked bonds drew the most demand in nine years.

Short-term debt rose gained while 10-year notes were little changed before this week’s auction of the securities, and the yield gap between them was at the steepest level in more than two weeks. U.S. service industries from retailers to homebuilders shrank in June for the ninth straight month. An auction of $8 billion of 10-year inflation-linked debt drew the most demand since 2000.

“We are starting to see risk assets, which have really outperformed in the last three months, start to wobble,” William O’Donnell, the Stamford, Connecticut-based head of Treasury strategy at RBS Securities Inc., said in a Bloomberg Television interview. The firm is one of 16 primary dealers that trade with the Fed. “That has brought some money back to the Treasury market which is what we saw in the auctions two weeks ago and the TIPS auction today.”

The two-year note yield fell four basis points, or 0.04 percentage point, to 0.95 percent, according to BGCantor Market Data. The rate touched 0.9252 percent, the lowest level since June 4. The price of the 1.125 percent security due in June 2011 increased 2/32, or 63 cents per $1,000 face amount, to 100 11/32. The 10-year note yield was little changed at 3.50 percent.

Oil Falls

Crude oil fell to a five-week low on growing concern that the global economic recovery will falter, curbing fuel consumption.

Oil dropped for a fourth straight session, the longest slide since February, as falling payrolls weigh on consumer spending for fuels. The price has dropped 13 percent from an eight-month high of $73.38 a barrel on June 30.

“It’s hard to see evidence of an economic recovery in the near term, so energy prices are moving lower from their lofty levels,” said John Kilduff, a senior vice president of energy at MF Global in New York.

Crude-oil futures for August delivery fell $2.68, or 4 percent, to $64.05 a barrel on the New York Mercantile Exchange, the lowest settlement since May 27. Prices are up 44 percent this year.

Currency Market

The yen advanced for a third session versus the euro in the longest stretch of gains since May on speculation the global economic recovery will be slow, encouraging demand for a refuge.

The dollar and yen touched the strongest levels in almost two weeks versus the euro as equities fell in Asia and Europe. The Norwegian krone, South African rand and Brazilian real declined versus the dollar and yen after oil and other commodities slumped.

“It’s a classic risk-aversion trade, with the yen on top, followed by the dollar,” said Vassili Serebriakov, a currency strategist at Wells Fargo & Co. in New York. “Evidence is building that economic recovery won’t be as strong as people hoped for. The financial markets’ optimism will have to come down to the reality.”

The yen climbed 0.8 percent to 133.26 per euro in New York, from 134.26 on July 3. The dollar traded at $1.3978, compared with $1.3980. The dollar touched $1.3877 and the yen reached 131.74 per euro, the strongest levels since June 23. Japan’s currency appreciated 0.7 percent to 95.33 versus the dollar from 96.04.

Microsoft Plans for Worst as U.S. Companies Show No End to Fear

During the last week of May, treasurers representing America’s bluest chip companies gathered at the Park Hyatt hotel in Philadelphia for a conference dubbed “Survival Skills.”

Instead of discussing ways to take advantage of the drop in borrowing costs to expand their businesses after the Federal Reserve cut interest rates to near zero, representatives of New York-based Colgate-Palmolive Co.,International Business Machines Corp. in Armonk, New York, and dozens of other companies had other plans.

After watching credit dry up almost overnight as the subprime mortgage contagion spread in 2007 and 2008 and Lehman Brothers Holdings Inc. collapsed in September, companies were more preoccupied with stockpiling cash and extending debt maturities by selling a record $301 billion of investment-grade bonds in the first half.

Those events were “fresh in everyone’s memory,” said Brad Fox, chairman of the National Association of Corporate Treasurers and treasurer of Pleasanton, California-based grocery chain Safeway Inc. “We spent a lot of time talking about the aftermath of the fourth quarter.”

Microsoft Corp., the world’s largest software maker, and Pfizer Inc., the maker of the cholesterol fighting drug Lipitor, led at least 262 non-financial borrowers in the first half, the most since at least 2001, according to data compiled by Bloomberg. Bond sales are rising even as the economy struggles to pull itself out of the deepest recession since the 1930s.

‘Precautionary Borrowing’

“There’s still a good deal of precautionary borrowing taking place,” said John Lonski, the chief economist at Moody’s Capital Markets Group in New York, a unit of Moody’s Investors Service. “There are a number of unresolved issues regarding access to capital.”

The $3.75 billion sale May 11 by Redmond, Washington-based Microsoft was its first ever and was done even though regulatory filings show the maker of Windows computer operating systems had $25.3 billion in cash and short-term investments as of March 31.

“It’s always better to issue when you don’t have to,” said Microsoft TreasurerGeorge Zinn. “Microsoft has been evolving its capital structure over a long period of time. This is just part of that logical evolution.”

While treasurers are anxious, signs the worst of the recession may be over is spurring demand for corporate bonds. U.S. investment-grade company debt returned 9.2 percent in the first half of the year, outperforming Treasuries by 13.7 percentage points, the most on record, according to Merrill Lynch & Co. index data.

Beating Stocks

They also did better than the Standard & Poor’s 500 Index of stocks, marking the first time since 2002 that the fixed- income securities outshined both Treasuries and equities. The gains this year in investment-grade corporate bonds compare with the loss of 6.82 percent last year. High-yield, high-risk, or junk, bonds returned 29 percent, after losing 26 percent, Merrill Lynch index data show.

“Demand for high-quality credit is still exceeding the supply,” said Mark Kiesel, global head of corporate bonds at Pacific Investment Management Co., which oversees $747 billion from Newport Beach, California. “You can get equity-like returns by owning corporate bonds.”

Consumer spending rose in May as benefits from the Obama administration’s stimulus plan spurred a jump in incomes. The 0.3 percent increase in purchases was the first gain in three months, the Commerce Department said June 26. Incomes climbed 1.4 percent, the most in a year, driving the savings rate to a 15-year high. Another report showed consumer sentiment rose in June to the highest level since February 2008.

Gross domestic product may grow 1.9 percent in 2010 after contracting 2.7 percent in 2009, according to a Bloomberg survey of economists.

Most Since 2001

The number of non-financial companies issuing bonds in the first half was up from 205 last year and was the most since at least 2001, when there were 264, according to Bloomberg data. When including high-yield, high-risk borrowers, sales overall, totaled $744 billion, compared with $590.2 billion in the same period of 2008.

“The broad participation has really advanced throughout the second quarter and we believe that will continue,” said John Cokinos, head of high-yield capital markets at Bank of America Merrill Lynch in New York. “There’s more of a willingness by the investor base to look at challenging names because the spreads have tightened so much.”

While the extra yield investors demand to own investment- grade company debt rather than Treasuries narrowed to 3.31 percentage points from 6.04 percentage points, it’s still almost triple the average for the decade ending in 2007, Merrill Lynch data show. Yields have declined 1.67 percentage points to 6.14 percent on average.

Feldstein’s Trepidation

Martin Feldstein, a member of the private panel that dates the start of recessions and recoveries, said the U.S. economy will grow for a few quarters and then contract again.

“We’re going to see a temporary substantial improvement,” Feldstein, the former head of the National Bureau of Economic Research and a Reagan administration adviser who is now a professor of economics at Harvard University, said in a July 1 interview on Bloomberg Radio. “I emphasize the words temporary and substantial.”

After the economy shrank at a 5.5 percent annual pace in the first quarter of the year, the change in GDP will be “closer to zero” or “even a small plus” for the April-to- June period, Feldstein said.

Reality Check

Optimism about the pace of the recovery was damped July 2, when the Labor Department in Washington said payrolls declined by 467,000 last month following a 322,000 drop in May. The jobless rate rose to 9.5 percent, the highest since August 1983, from 9.4 percent.

Underscoring Feldstein’s concerns, the treasurer’s conference May 27 to May 29 included sessions on “Liquidity Management in Volatile Markets,” according to the program titled “High Profile Treasury: Survival Skills.” The group’s board includes IBM Treasurer Martin Schroeter and Colgate Treasurer Edward Filusch.

“This year we’ve seen a structural shift in the market,” said Mark Bamford, head of global fixed-income syndicate in New York at Barclays Capital, the biggest underwriter of bonds worldwide this year. “We’ve had crises before, but we haven’t had such concerns about the global banking sector as we had over the course of the past year.”

Rising Defaults

While credit spreads are narrowing, defaults continue to rise. The U.S. speculative-grade default rate jumped to 8.1 percent in May, the highest since October 2002, and may reach 14.3 percent in the next 12 months, Standard & Poor’s says.

Yield spreads will likely remain wider than the average of the last 10 years, said David Kelly, the chief market strategist for J.P. Morgan Funds in New York. The unit of JPMorgan Chase & Co. oversees $438 billion.

“There will be a new normal,” Kelly said. “When we have that strong evidence the economy is beginning to recover, we’ll see wider spreads than we saw in the middle of this decade because those numbers themselves were a bit of an aberration.”

There are signs that banks are still wary of lending. Financial institutions arranged $38.4 billion in leveraged, or high-yield, loans in the first half, an 80 percent drop from the same period in 2008, according to Bloomberg data. A record $978.5 billion of leveraged loans were made in 2007 as banks competed to finance the largest buyouts ever.

Use of Proceeds

No longer able to rely on banks for a steady supply of capital, borrowers are selling bonds and using the proceeds to repay short-term debt and loans.

Unsecured commercial paper outstanding plunged 31 percent to $1.15 trillion, the lowest level since September 1998, Fed data show. Proceeds from about 60 percent of high-yield bond sales this year through May were used to pay down bank debt, according to S&P’s LCD. That compares with 17 percent in the same period of 2007.

Las Vegas-based Harrah’s Entertainment Inc., the world’s biggest casino company, sold $1.375 billion of notes in May to repay parts of a $9.18 billion senior secured credit facility used to finance Apollo Management LP and TPG Inc.’s buyout of the company in January 2008, according to a regulatory filing.

On June 17, Terremark Worldwide Inc., a provider of information-technology infrastructure services, sold $420 million of 12 percent senior secured notes due in 2017 in the company’s first bond offering in two years, Bloomberg data show.

‘Nonexistent’ Loans

“Most of the bank market has really been, to some degree, nonexistent or very slow,” said Jose Segrera, the Miami-based company’s CFO. “The market opened up a little bit and we thought for us it was a great avenue to fund.”

New York-based Pfizer, the world’s largest drugmaker sold $13.5 billion of bonds in March to repay bank loans coming due in December that were used to finance its $64.7 billion bid for Madison, New Jersey-based Wyeth.

While the cost of issuing the bonds was about 1 to 2 percentage points higher than it would have been a year earlier in terms of the interest rate, demand from corporate debt investors made it a good time sell the securities, saidFrank D’Amelio, Pfizer’s CFO.

“The permanent financing compared to the bridge financing is economically very sound,” D’Amelio said. “Which is part of why I wanted to do it as quickly as I could, and two, it was clearly a nice market opportunity.”

Anadarko Maturities

Investor demand prompted Anadarko Petroleum Corp. to lengthen maturities on bonds to 30 years, said Robert Gwin, CFO of the company, based in The Woodlands, Texas. The second- largest independent U.S. oil and natural gas producer sold $2 billion in debt this year, Bloomberg data show.

“On an absolute basis, cost of capital is attractive, and on a relative basis, certainty today is better than uncertainty in the future,” Gwin said.

Anadarko increased the size of an offering of 5- and 10- year notes to $900 million from $750 million on June 9 and added a 30-year maturity after requests from investors, Gwin said. “Since there hasn’t been as much long issuance, that’s what we understood drove their interest,” he said. “If you can put some relatively low-cost capital out very, very long, it gives you the ability to earn returns and continue to reinvest that capital without being subject to refinancing risk.”