Corporate America Stampedes Into Debt as Sales Pass $1 Trillion

Corporate borrowers are selling investment-grade bonds at the fastest clip since 2020 as companies take advantage of lower yields to issue debt before the November election.

Blue-chip firms are on track to issue more than $6 billion Tuesday, pushing yearly volume over the $1 trillion mark just eight months into the year. Weak economic data reports last week fueled worries the Federal Reserve has waited too long to cut rates, leading to Monday’s market rout when at least 10 issuers stayed on the sidelines. Just seven companies opted to sell debt Tuesday when the markets were relatively calmer.

The speed and breadth of issuance this year is being driven by two factors: issuers are pouncing on demand from yield-focused investors plowing into the asset class. Finance chiefs are also eager to raise cash before the upcoming presidential election has the potential to inject volatility into the market.

Both Treasury yields and the average cost for blue-chip debt plunged in recent days, creating an additional opportunity for issuers to raise cash at cheaper levels. High-grade bond yields fell to 4.99% on Monday, hovering at the lowest since February 2023 after weak employment data sparked a stampede into Treasuries. The 10-year Treasury yield also dropped below 4% for the first time since February, “a psychological threshold for many issuers,” Barclays Plc strategists Bradley Rogoff and Dominique Toublan wrote in a report Friday.

“If Treasury yields stay low, I think we are going to see issuance move forward even into a volatile market because financing costs are as attractive as they’ve been since early 2022 at this point,” Blair Shwedo, head of fixed income sales and trading at U.S. Bank, said in an interview. “So yes, we’re wider in spreads, but if you’re a borrower looking to lock in all-in costs, this is the best time to do so in over two years if you can get the deal printed.”