US high-grade bond sales hit highest since ’17

Corporate bond issuance in the US has surged in July, reaching the highest level since 2017 buoyed by strong investor demand amid favourable market conditions.

US investment-grade bond issuance has recorded almost $92.2 billion in July, the biggest July volume since $123 billion was issued in 2017. That’s well over the top end of $85 billion dealers set to be sold, with about a week left to go.

Investors are eagerly purchasing corporate bonds to lock in higher yields before the Federal Reserve potentially begins cutting interest rates. This robust appetite has led to record-breaking issuance volumes, well surpassing initial expectations.

Companies are taking advantage of this favourable environment to raise capital for various purposes, including refinancing existing debt and funding acquisitions. The cost of borrowing for corporations has remained relatively low, further incentivizing debt issuance.

While the pace of issuance is expected to slow down in the coming months, it’s unlikely to see a significant drop until the latter half of the year. The overall trend indicates a healthy corporate bond market, supported by strong investor confidence.

This surge in corporate bond issuance highlights the positive sentiment in the credit market and the ongoing recovery of the US economy.

Capital One, Apollo Debt Solutions BDC and Whistler Pipeline LLC started bond sales on Wednesday. UnitedHealth Group Inc. and Occidental Petroleum Corp. purchased a combined $17 billion on Tuesday, with deals for refinancing and acquisition financing, respectively.

Attribution: Bloomberg