Companies are marketing $3.5 billion of debt in the U.S. as relative yields on corporate debt reflect growing risk that the economic recovery will stall.

The extra yield investors demand to own company bonds instead of U.S. Treasuries rose to 294 basis points on Aug. 20, up 6 basis points from the month’s low on Aug. 9, according to Bank of America Merrill Lynch index data. A basis point is 0.01 percentage point.

Investors have become more concerned that the economy will slip back into recession than about financial regulatory reform or European countries’ ability to manage their debt, Barclays Capital strategists Jeffrey Meli and Bradley Rogoff wrote in an Aug. 20 note to clients.

“Although spreads are materially lower than during the peak of the credit crisis, from an historical perspective, they are priced for a substantial slowdown in growth,” Meli and Rogoff wrote. “News about macroeconomic conditions is now driving market prices.” [Read More]