Firms take advantage of growing demand of investors in US corporate bond market, worth USD10T
Date
5/14/2024 7:37:32 AM
(MENAFN) In a rush to capitalize on fervent investor appetite and favorable borrowing conditions, businesses have surged into the US corporate bond market, valued at an impressive USD10 trillion. Seizing the opportunity presented by robust demand and low borrowing premiums, companies have flooded the market with substantial volumes of new debt offerings. Notably, enterprises dealing in high-yield or junk bonds have been particularly active, collectively issuing green currency-denominated debt exceeding USD14 billion across more than 20 transactions in recent days. This surge represents the largest total issuance since late 2021, as indicated by data sourced from the London Stock Exchange Group and reports from the Financial Times.
Even entities categorized as investment-grade borrowers, typically enjoying more reliable access to capital markets due to their superior credit standings, have eagerly participated in this heightened activity. With a flurry of 45 offerings, these firms have raised an impressive USD56.7 billion in new bonds, marking the highest weekly dollar value raised since the conclusion of February and the largest number of offerings witnessed in over two and a half years.
Market observers, including bankers and investors, attribute this surge in bond issuance to growing confidence that US interest rates are unlikely to experience a significant decline throughout the year. This sentiment has spurred companies to expedite their financing endeavors, fearing the prospect of higher borrowing costs if they delay their capital-raising initiatives in anticipation of future opportunities. Additionally, concerns surrounding potential market volatility stemming from the November elections have further incentivized businesses to secure funding promptly, aiming to shield themselves from any adverse economic turbulence that might arise later in the year.
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