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Corporate borrowers began in 2025 with $ 83 billion in bond sales, capitalizing on rising investor demand to increase debt ahead of market volatility caused by returns. To the power of Donald Trump.
Borrowing in US dollar-denominated investment and high-yield bond markets reached $ 83.4 billion as of Jan. 8, the highest year-on-year figure since 1990, according to LSEG data. According to data from LSEG.
Top borrowers led the rush, including international banks such as BNP Paribas and Société Générale, car giants such as Toyota and heavy machinery maker Caterpillar. Bank of America is expected to join the fall later in January after their earnings season.
“The market is strong, so there is no need for them to delay,” he said. Marc Baigneres, co-head of investment finance at JPMorgan, said they were trying to come as soon as possible.
The rush to sell new debt comes as the spread – the difference between yields on corporate debt versus safer government bonds – is near a decades-long lows, prompting companies to raise funds in value. Cheap while they can.
Maureen O’Connor, global head of Wells Fargo’s high-end debt group, said: “There is a lot of risk in spreading – rising inflation, a slowing economy, the central bank may suspend interest rate cuts and even continue raising interest rates. “. .
According to the ICE BOFA, the average U.S. investment spread spread by only 0.83 percent on Wednesday, not far from the narrowest point since the late 1990s. According to ICE BOFA.
January is usually busy for debt issuance, especially by banks. But the latest deal comes as companies owed less money to Trump’s inauguration, with economists warning that incoming US presidential telegraph policies, including trade taxes, could lead to inflation.
On Wednesday, minutes from the last central bank meeting showed officials were also concerned about inflation and wanted to be “cautious” with the pace of future rate cuts.
Major borrowers are also under pressure to refinance quickly, with $ 850bn of high-end dollar debt set to mature this year and another $ 1tn by 2026, according to the report. Wells Fargo calculations.
“It’s an attractive market environment for borrowers,” said Dan Mead, chief investment officer of Bank of America. “You continue to see a healthy investor cash balance and acceptance of new issues coming to market, and prices at an attractive spread that is leading issuers to look even faster. Rather than waiting. ”
Edward Al-Hussainy, senior interest rate analyst and currency analyst at Columbia Threadneedle, said pension funds and insurers “are particularly expected” now to buy debt.
Banks are usually the first to take advantage of the narrow spread and are among the most active card issuers to date. But market participants said non-financial borrowers could join the rush before the 10-year Treasury yield, the standard for global borrowing costs – rises further. It is now at around 4.7 percent after rising sharply in recent weeks.
“We have some significant risk events in January,” O’Connor said, referring to U.S. employment data, which expires on Friday, which will give investors a clue as to the future path of interest rates and interest rates. Trump’s January 20 inauguration.
“We have heard a little bit of rhetoric from the administration coming in on what the market can quickly see behind that,” O’Connor said. “I think there are concerns that could push another leg higher in treasury yields.” Some “coupon-focused borrowers” – meaning companies focus primarily on the total output they pay to investors – “are trying to get ahead of that,” she added.
This week’s volume, which is consolidated into three days by a shorter period of trading hours on Thursday and Friday payroll, continues from borrowing in 2024, when corporate bonds and loans are available. The effect reached a record $ 8tn.
While current conditions remain favorable for debt sellers, some buyers say they are now willing to sit outside until more attractive terms emerge.
“Most deals are coming at a level that leaves very little value on the table,” said Andrzej Skiba, head of fixed income at BlueBay US at RBC GAM. “(It’s) looks unattractive and we like to keep the powder dry for increased volatility after the launch as markets find a mix of this new policy and the Fed’s response to that. ”
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