Corporate Borrowers 2025 will begin with an $83 billion bond bonanza

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Corporate Borrowers 2025 began with a record $83 billion in dollar bond sales, ahead of the market volatility created by Donald Trump’s return to power, fueling investors’ appetite for more debt.

According to data from LSEG, borrowing in US dollar investment grade and senior bond markets reached $83.4 billion on January 8.

High-profile borrowers led the rush, including international banks such as BNP Paribas and Société Générale, car giants such as Toyota and heavy machinery maker Caterpillar. American banks They are expected to join the tournament in January after their rookie season.

“The market is strong, so there’s no need for them to delay. They’re trying to come as soon as possible,” said Mark Bigneres, associate head of investment-grade finance at JPMorgan.

The rush to sell new debt comes as a spread – the difference between the yield on Corporate debt Along with safe government bonds – they are at multi-decade lows, prompting companies to raise money cheaply when they can.

Maureen O’Connor, Wells Fargo’s global head of senior debt syndication, said: “There are many risks to expansion — inflation is slowing, the economy is slowing, the Fed may pause rate cuts or even raise rates.” .

The average U.S. investment grade spread stood at 0.83 percentage points on Wednesday, not much above the narrowest point since the late 1990s, according to ICE BOFA.

January is typically busy for lending, especially by banks. But the latest deal comes as companies take on cheap debt ahead of Trump’s inauguration — economists have warned the incoming US president’s telegraph policies, including trade tariffs, could be inflationary.

On Wednesday, minutes from the last Federal Reserve meeting showed that officials are concerned about inflation and want to be. “careful” With the speed of the future deceleration.

Big borrowers are under pressure to refinance quickly, with $850bn of senior dollar debt maturing this year and another $1tn in 2026, according to Wells Fargo calculations.

“It’s a very attractive market environment,” Bank of America head of investment-grade syndicate Dan Mead told Borrowers. “Healthy investors continue to see cash balances and acceptance of new issues coming to market and pricing at very attractive spreads that issuers want to move sooner rather than later.”

Edward Al-Husseini, senior rate and money analyst at Columbia Threadneedle, said pension funds and insurance companies were “uniquely predisposed” to buying debt at the moment.

Banks are the first to use narrow spreads and are among the most active issuers so far. But market participants said non-financial borrowers could join quickly before the 10-year Treasury yield – a benchmark for global borrowing costs – rises further. After rising sharply in recent weeks, it now sits at 4.7 percent.

“We have two very significant risk events in January,” O’Connor said, referring to Friday’s U.S. jobs data, which will give investors an indication of future interest rates, and Trump’s Jan. 20 inauguration.

“We’ve heard quite a bit of talk from the incoming administration on what the market might see very quickly from the incoming administration,” O’Connor said. I think there is concern that it could raise another leg in Treasury yields. Some “coupon-oriented borrowers” — meaning companies focused primarily on the gross yield they pay investors — “are trying to get in on that front,” she added.

With shortened trading hours in 2024 and Friday’s payrolls packed for just three days, this week’s volumes were 2024. They will follow from the loan bonanza in 2024 – when Global corporate bond issuance and leveraged loans hit record 8tn.

While the current situation remains favorable for debt sellers, some buyers now say they are willing to sit on the sidelines until more attractive conditions emerge.

“Most offers come at levels that leave very little value on the table,” said Andrzej Skiba, head of BlueBuy US fixed income at RBC GAM. “(This looks very bleak and we prefer to dry powder for increased volatility after the inauguration, as the market gets to know this new policy mix and the Fed’s response.”