Global bond sales had their busiest ever start to a year as borrowers of every stripe seize on investors’ insatiable appetite for risk.
Corporations and governments in the US, Europe and Asia have borrowed roughly $260 billion across currencies so far this year, the highest tally on record for the comparable period, according to data compiled by Bloomberg. A further barrage of bond offerings from borrowers in Asia kicked off Thursday and are poised to push that number higher.
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 US high-grade market, 11 borrowers priced debt on Wednesday, pushing weekly supply past $88 billion and marking the largest non-Covid week by volume on record, according to data compiled by Bloomberg News.
Deals this week include chipmaker Broadcom Inc., which raised $4.5 billion in a multi-tranche deal, along with French telecommunications company Orange SA, which raised $6 billion in a high-grade dollar deal across five tranches. Both transactions signal significant demand for longer-dated securities, continuing a trend seen last year.
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 US high-yield market is having its busiest week in a month with more than $6 billion priced since Monday.
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 this week, 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 €57 billion ($66.5 billion) 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 on Thursday in Europe, with mandated deals from Italy and Portugal expected.
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 EMEA capital markets at Mitsubishi UFJ Financial Group Inc.
In the Asia Pacific, borrowers have raised more than $22 billion this week, in one of the busiest starts to any year. Several issuers including Korea Housing Finance Corp. are set to price notes on Thursday.