US corporations rush to bond market in fundraising flurry

By Matt Tracy

(Reuters) – U.S. corporations rushed to the company bond markets on Monday as what’s normally a seasonal fund-raising spree over the primary few days of a brand new yr gained additional momentum to get forward of any additional rise in Treasury yields – which might improve funding prices – after jobs information on Friday.

Some 22 corporations have been providing new bonds within the U.S. investment-grade bond market on Monday, taking the tally of recent debtors to 34 within the first few days of 2025.

Syndicate bankers count on to see corporations elevating practically $65 billion this week, and maybe as a lot as $200 billion this month, in a bond issuance spree that’s displaying no signal of slowing after a prolific 2024.

“With spreads nearing historic ranges and the market ostensibly giving up on the hope of considerably decrease risk-free charges, now seems to be like an opportune time for corporates to fund themselves,” stated Connor Fitzgerald, fastened revenue portfolio supervisor at Wellington Administration.

“That is particularly the case when you think about the uncertainty the market might must take care of in 2025 because the incoming administration’s insurance policies – a few of that are unorthodox – actually begin to take form,” he stated.

Corporations have been additionally issuing bonds to make the most of credit score spreads, or the premium they pay over Treasuries, that are nonetheless just a few foundation factors above their document tightest ranges touched on Nov. 30, at 83 foundation factors on Friday, in response to the ICE BofA Company Index.

In 2024, investment-grade rated corporations raised $1.52 trillion, 26% greater than the $1.21 trillion in 2023, making it the second most prolific yr on document, in response to Informa (LON:INF) International Markets information.

A number of giant Yankee offers got here to market on Monday, together with from BNP Paribas (OTC:BNPQY), Societe Generale (OTC:SCGLY), Hyundai (OTC:HYMTF) Capital America and Toyota (NYSE:TM). Tractor maker John Deere (NYSE:DE) and heavy tools producer Caterpillar (NYSE:CAT) are additionally issuing bonds through their financing arms. 

Monday’s slate of bond choices follows sturdy debt issuance on Friday, when automakers Ford Motor (NYSE:F) and Common Motors (NYSE:GM) tapped the market.