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Corporate borrowers started 2025 with a record $83 billion in dollar bond sales, benefiting from booming investor demand to raise debt ahead of any market volatility caused by Donald Trump's return to power.
Borrowing in the investment-grade and high-yield bond markets in U.S. dollars reached $83.4 billion by January 8, the highest year-to-date figure since 1990, according to data from LSEG.
High-grade borrowers led the rush, including international banks such as BNP Paribas and Société Générale, and auto giants such as Toyota and heavy machinery maker Caterpillar. American banks They are expected to join the fray later in January after their earnings season.
He added: “The market is strong, so there is no need to delay.” “They are trying to come as soon as possible,” said Mark Benieris, global co-head of investment finance at JPMorgan.
The rush in new debt sales comes in the form of spreads – the difference between the yield on bonds Corporate debt Against safer government bonds – they are near multi-decade lows, incentivizing companies to raise money cheaply while they can.
“There are a lot of risks to spreads — rising inflation, a slowing economy, the Fed potentially pausing interest rate cuts and even moving to raise rates,” said Maureen O'Connor, global head of Wells Fargo's high-quality debt group. .
U.S. investment-grade spreads averaged just 0.83 percentage points on Wednesday, not much more than their narrowest point since the late 1990s, according to ICE BOFA.
January is usually a busy month for debt issuances, especially by banks. But the latest deal blowout comes as companies turn to cheaper debt ahead of Trump's inauguration – with economists warning that the next US president's policies, including trade tariffs, could be inflationary.
On Wednesday, minutes from the Fed's latest meeting showed that officials were also concerned about inflation and wanted to “to caution” With the pace of future interest rate cuts.
Large borrowers are also under pressure to refinance quickly, with $850 billion of high-quality dollar debt set to mature this year and another $1 trillion in 2026, according to Wells Fargo calculations.
“It's a very attractive market environment” for borrowers, said Dan Mead, head of the investment grade group at Bank of America. “You continue to see healthy investor cash balances and receptiveness to new issues coming into the market, and pricing at very attractive spreads resulting in issuers looking to exit sooner rather than wait.”
Pension funds and insurance companies are currently “exceptionally willing” to buy debt, said Edward El-Husseini, senior interest rates and currency analyst at Columbia Threadneedle.
Banks are usually the first to benefit from tight spreads and are among the most active issuers by far. But market participants said non-financial borrowers could join the rush before the 10-year Treasury yield – a benchmark for global borrowing costs – rises further. It now stands at about 4.7 percent after rising sharply in recent weeks.
“We have two fairly critical events in January,” O'Connor said, pointing to US jobs data due on Friday, which will give investors clues about the future path of interest rates, and Trump's inauguration on January 20.
“We've heard a fair amount of rhetoric from the incoming administration about what the market could quickly see on the back of this,” O'Connor said. “I think there is concern that this could spur another rise in Treasury yields.” Some “coupon-focused borrowers” — that is, companies that focus primarily on the total return they pay investors — “are trying to get around that,” she added.
This week's volumes, which were condensed to just three days by the shortening of trading hours on Thursday and payrolls on Friday, track a borrowing boom in 2024 – when… Global issuance of corporate bonds and leveraged loans has reached a record $8 trillion.
While current conditions remain favorable for debt sellers, some buyers said they are now willing to sit on the sidelines until more attractive conditions arise.
“The vast majority of deals are coming in at levels that leave little value on the table,” said Andrei Skiba, head of BlueBay US fixed income at RBC GAM. “It looked a little unattractive, and we would prefer to keep the powder dry in anticipation of a potential increase in volatility after the inauguration, as the market figures out this new mix of policies and the Fed's response to that.”
