Borrowers around the globe are rushing to debt markets on Tuesday, kicking off what is likely to be one of the busiest sessions of the year for bond markets.
In Europe, 18 borrowers are seeking at least €19.7 billion ($22.9 billion) equivalent of bonds, with the total set to grow through the day, according to data compiled by Bloomberg. Meanwhile, seven borrowers in Asia Pacific were in the market for dollars, including Japan’s largest bank Mitsubishi UFJ Financial Group Inc. aiming to raise $3.5 billion, according to people familiar with the matter.
The US is likely to substantially add to this tally later today, as dealmakers and investors return from the Labor Day holiday on Monday. While September is typically one of the busiest months following summer holidays, it’s particularly in focus this year, ahead of key central bank meetings starting this week and US midterm elections in November.
The barrage also shows issuers are eager to capitalize on a rare combination of tight credit spreads, resilient investor demand and relatively calm credit markets. The fundraising is set to accelerate as dealers expect about $70 billion of issuance in the US high-grade market this week alone, with investments in AI further propelling bond sales.
Credit spreads are hovering near multi-decades lows but have begun to widen in recent weeks as investors brace for this post-summer rush. Investors can still lock in yields of around 5.5% on average for better-rated dollar corporate debt.
That’s making up for the risk that the fallout from the Middle East conflict and higher energy prices could dent robust corporate profits. The European Central Bank is expected to hike interest rates on Thursday, while a fresh update on US inflation is due on Friday and Federal Reserve officials have suggested that it will be crucial in determining whether they raise rates.
“As US rates might stay higher for longer, issuers are likely pushing ahead,” said Zerlina Zeng, head of Asia strategy at CreditSights in Singapore. “Credit spreads are still tight and market sentiment is strong.”
Hyperscalers such as Alphabet Inc. are increasingly turning to global bond markets to finance their capital spending, which could reach $6 trillion through 2030, according to Bloomberg Intelligence. Amazon.com Inc. has mandated its debut sterling bond sale, seeking maturities from three-years to 19-years, with the deal expected to be sold on Wednesday, according to a person familiar with the matter.
“Companies are tapping the bond market aggressively to fund data center buildouts, infrastructure, and compute capacity,” said Xixi Sun, head of greater China debt syndicate at Citigroup Inc. “That appetite has pushed global corporate bond issuance to record levels. We’re seeing this play out in the US, Europe and across Asia as well.”
In Asia, Mizuho Financial Group Inc., Commonwealth Bank of Australia and Malayan Banking Bhd are among lenders targeting fundraising, while medical device maker Olympus Corp. is one of four companies to have hired banks for a potential offering.
In Europe, the UK is tapping an outstanding gilt and is set to pay its highest borrowing costs on a debt sale since at least 1998. Spain is seeking €4 billion, while French utility Electricité de France SA is raising a green hybrid bond to fund works to extend the life of its nuclear power plants.
This article was provided by Bloomberg News.