Strong demand: A Wall Street sign near the New York Stock Exchange. Observers say eager bond buyers appear unfazed by geopolitical tensions in both hemispheres. — Bloomberg
New York: Global bond sales are having their busiest ever start to a year as borrowers of every stripe seize on investors’ insatiable appetite for risk.
Corporations and governments in the United States, Europe and Asia have borrowed around US$245bil across currencies through Jan 7, the highest tally on record for the period, according to data compiled by Bloomberg.
Issuers that shelved borrowing plans in December are now piling into the market to lock in funding ahead of an earnings blackout starting next week, with eager buyers seemingly unfazed by geopolitical tensions escalating in both hemispheres.
Borrowers are also trying to get ahead of an expected surge in bond sales tied to artificial-intelligence projects.
“The year has started out with a bang,” said Priya Misra, a portfolio manager at JPMorgan Investment Management.
“Demand has been keeping up with supply and there are barely any new issue concessions.”
In the United States, nearly 40 investment-grade firms have sold US$72bil of bonds this week through Tuesday, the busiest two-day calendar on record, according to Bloomberg News analysis.
That includes chipmaker Broadcom Inc, which raised US$4.5bil in a multi-tranche deal, along with French telecommunications company Orange SA, which raised US$6bil in a high-grade US dollar deal across five tranches.
Both transactions signal significant demand for longer-dated securities, continuing a trend seen last year.
Eleven borrowers were in the market on Wednesday and more deals are expected this week, putting weekly issuance on pace to reach the highest volume since 2020, when pandemic-era stimulus juiced the markets.
Underwriters also foresee an avalanche of offerings from the biggest US banks next week after they report earnings and are able to sell debt.
Meanwhile, the high-yield market is having its busiest week in a month with US$4.45bil priced since Monday.
Bond sales with ratings in the riskier CCC tier are also being marketed.
January is typically one of the busiest months for global bond sales as companies secure funding early and investors put fresh cash to work.
Robust corporate results, a resilient consumer and high-grade bond yields that are still attractive – especially for investors looking to rebalance their portfolios – are all helping boost demand, Misra added.
Europe is also having a bumper start to the year. The primary market saw a record day of new bond sales on Wednesday, with more than 57bil or about US$66.6bil raised, according to data compiled by Bloomberg that includes corporations, financial institutions and countries.
The market saw deals from across the spectrum, with firms selling multi-tranche notes across a range of maturities as they look to take advantage of positive investor sentiment to get ahead on their annual borrowing plans while risk premiums are historically low.
The pace of issuance is likely to continue this week in Europe, with mandated deals from Italy and Portugal expected to hit the market.
Corporate bond spreads – the extra yield investors demand to hold those securities over US Treasuries – generally remain tight despite the debt deluge, underscoring the strong appetite for credit.
“With the potential risk of spreads widening from the current levels, issuers are jumping into the market to lock in attractive funding, benefiting from robust New Year investor demand,” said Fabianna Del Canto, co-head of Europe, the Middle East and Africa capital markets at Mitsubishi UFJ Financial Group Inc.
In Asia, borrowers have raised more than US$22bil this week and more issuance may follow in the coming days as several previously announced mandates have yet to materialise. — Bloomberg
