By Matt Tracy
(Reuters) – U.S. companies rushed to the corporate bond markets on Monday as what is usually a seasonal fund-raising spree over the first few days of a new year gained extra momentum to get ahead of any further rise in Treasury yields – which would increase funding costs – after jobs data on Friday.
Some 22 companies were offering new bonds in the U.S. investment-grade bond market on Monday, taking the tally of new borrowers to 34 in the first few days of 2025.
Syndicate bankers expect to see companies raising nearly $65 billion this week, and perhaps as much as $200 billion this month, in a bond issuance spree that is showing no sign of slowing after a prolific 2024.
“With spreads nearing historic levels and the market ostensibly giving up on the hope of significantly lower risk-free rates, now looks like an opportune time for corporates to fund themselves,” said Connor Fitzgerald, fixed income portfolio manager at Wellington Management.
“This is especially the case when you consider the uncertainty the market may have to contend with in 2025 as the incoming administration’s policies – some of which are unorthodox – really start to take shape,” he said.
Companies were also issuing bonds to take advantage of credit spreads, or the premium they pay over Treasuries, which are still only a few basis points above their record tightest levels touched on Nov. 30, at 83 basis points on Friday, according to the ICE BofA Corporate Index.
In 2024, investment-grade rated companies raised $1.52 trillion, 26% more than the $1.21 trillion in 2023, making it the second most prolific year on record, according to Informa (LON:INF) Global Markets data.
Several large Yankee deals came to market on Monday, including 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 equipment producer Caterpillar (NYSE:CAT) are also issuing bonds via their financing arms.
Monday’s slate of bond offerings follows robust debt issuance on Friday, when automakers Ford Motor (NYSE:F) and General Motors (NYSE:GM) tapped the market.