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Corporate borrowers kicked off 2025 with a record $83 billion in dollar bond sales, capitalizing on strong investor demand for more debt ahead of any market volatility triggered by Donald Trump’s return to power.
Borrowing in the US dollar investment and high-yield bond markets reached $83.4 billion as of Jan. 8, the highest year-to-date figure, according to LSEG data.
Highly rated borrowers are leading the rush, including international banks like BNP Paribas and Société Générale, auto giants like Toyota and heavy machinery maker Caterpillar. American banks they are expected to join the fray later in January after their season of earnings.
“The market is strong, so there is no need for them to delay. They’re trying to get there as early as possible,” said Marc Baigneres, global co-head of investment finance at JPMorgan.
The flurry of new debt sales comes as spreads — the difference between yields on corporate debt relative to safer government bonds — are near multi-decade lows, prompting companies to raise funds cheaply while they can.
“There are many risks to margins — rising inflation, a slowdown in the economy, the Fed could pause rate cuts and even start raising rates,” said Maureen O’Connor, global head of Wells Fargo’s senior debt syndicate. .
The average US investment grade was just 0.83 percentage points on Wednesday, not far above its lowest point since the late 1990s, according to ICE BOFA.
January is usually full of borrowing, especially by banks. But the latest deal comes as companies lock in cheaper debt ahead of Trump’s inauguration – and economists warn the incoming US president’s telegraphed policies, including trade tariffs, could be inflationary.
On Wednesday, minutes from the Federal Reserve’s latest meeting showed that officials are also worried about inflation and want to be “carefully” with the pace of future rate cuts.
Large borrowers are also under pressure to refinance quickly, with $850 billion of high-dollar debt maturing this year and another $1 billion in 2026, according to Wells Fargo calculations.
“It’s a very attractive market environment” for borrowers, said Dan Mead, head of Bank of America’s investment syndicate. “You continue to see healthy investor cash balances and receptivity to new issues coming to market, and pricing at very attractive margins which leads to issuers wanting to go sooner rather than wait.”
Edward Al-Hussainy, senior rate and currency analyst at Columbia Threadneedle, said pension funds and insurance companies are “extremely predisposed” to buying debt at the moment.
Banks are usually the first to take advantage of tight spreads and are among the most active issuers to date. But market participants said non-financial borrowers could join the rush before the 10-year bond yield – a benchmark for global borrowing costs – rises further. It now stands at around 4.7 percent after a sharp rise in recent weeks.
“We have some pretty critical risk events in January,” O’Connor said, pointing to Friday’s U.S. jobs data that will offer investors clues about the future path of interest rates and Trump’s Jan. 20 inauguration. .
“We’ve heard a lot of rhetoric from the new administration about what the market could see quickly based on that,” O’Connor said. “I think there is concern that this could catalyze another leg higher in government bond yields.” Some “coupon-oriented borrowers” — meaning companies focused primarily on the total return they pay investors — “are trying to get ahead of that,” she added.
This week’s volumes, which have been reduced to just three days due to Thursday’s reduced hours and Friday’s payrolls, continue the borrowing fortunes in 2024 — when global issuance of corporate bonds and leveraged loans 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 emerge.
“The vast majority of deals are coming in at levels that leave very little value,” said Andrzej Skiba, head of BlueBay US fixed income at RBC GAM. “[It has] looks pretty unattractive and we’d rather keep the powder dry because of the potential increase in volatility after the inauguration as the market learns about this new policy mix and the Fed’s response to it.”
