Corporate borrowers kick off 2025 with record-setting $83bn bond bonanza

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Corporate borrowers sold $83 billion in bonds, capitalizing on the demand from investors excited to raise debt ahead of market volatility due to Donald Trump’s return to power in 2025.

U.S. dollar borrowing in the investment-grade and high-yield bond markets totaled $83.4 billion on Jan. 8, the highest since 1990, according to LSEG data.

High-grade borrowers including international banks such as BNP Paribas and Société Générale, car giants such as Toyota and heavy equipment maker Caterpillar led the crowd. US Bank They are expected to join the fray in January after the earnings season.

“The market is strong, so they don’t need to delay. They’re trying to come in as quickly as possible,” said Mark Bigneres, global co-head of investment-grade finance at JPMorgan.

The rush to sell new debt comes as the spread — the difference between yields on Corporate debt vs. safer government bonds — near multi-decade lows, encouraging companies to raise cheap funds while they can.

Maureen O’Connor, global head of high-grade debt syndicates at Wells Fargo, said, “There are many risks to the spread — rising inflation, the economy slowing, the Fed pausing to cut potential rates and even moving toward rate hikes.”

According to ICE BOFA, the average U.S. investment-grade spread sat at just 0.83 percentage points on Wednesday, not more than its narrowest point since the late 1990s.

January is usually busy for lending, especially banks But the latest deal imploded as companies locked in cheap loans ahead of Trump’s inauguration – with economists warning that the incoming US president’s telegraphed policies, including trade tariffs, could be inflationary.

On Wednesday, minutes from the Federal Reserve’s last meeting showed that officials were concerned about inflation and wanted to be. “Caution” With the pace of future rate cuts.

Big borrowers are also under pressure to refinance quickly, with $850bn of high-grade dollar loans maturing this year and another $1tn in 2026, according to Wells Fargo calculations.

“It’s a very attractive market environment” for borrowers, said Dan Mead, head of investment-grade syndicates at Bank of America. “You see healthy investor cash balances and receptivity to new issues coming to market and pricing at very attractive spreads that make issuers want to move sooner rather than wait.”

Edward Al-Hussaini, senior interest rate and currency analyst at Columbia Threadneedle, said pension funds and insurance companies were “tremendously inclined” to buy debt right now.

Banks are usually the first to take advantage of narrow spreads and are among the most active issuers by far But market participants said non-financial borrowers could join the rush before the 10-year Treasury yield – a benchmark for global borrowing costs – rises further. It now sits at around 4.7 percent after climbing sharply in recent weeks.

“We have a number of serious risk events in January,” O’Connor said, pointing to Friday’s U.S. jobs data, which will give investors clues about the future path of interest rates and Trump’s Jan. 20 inauguration.

“We’ve heard a bit of rhetoric from the incoming administration that the market could quickly see that back,” O’Connor said. “I think there’s a concern that this could catalyze another spike in Treasury yields.” Some “coupon-centric borrowers” – meaning companies focused primarily on the total yield they provide to investors – are “trying to get ahead of that”, he added.

This week’s volume, which has been compressed into just three days by shortened trading hours on Thursday and Friday’s earnings, follows on from a borrowing bonanza in 2024 — when Global issuance of corporate bonds and leveraged debt hit a record $8tn.

While current conditions have been favorable for loan sellers, some buyers say they are now willing to sit on the sidelines until more attractive conditions emerge.

“Most deals are coming in at levels that put very little value on the table,” said Andrzej Skiba, head of BlueBay US fixed income at RBC GAM. “[It has] It looks rather unsustainable and we prefer to keep the powder dry for potential volatility after the opening, as the market finds a mix of this new policy and the Fed’s response.”