U.S. corporate bond sales total $95B for busiest week since pandemic

[A man examines the inscription Bonds with a magnifying glass. Assessment of the value and profitability of securities. Investment. Terms and conditions. Face value. Raise money to finance new projects]
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U.S. companies are tapping the bond market at their fastest pace since the pandemic, setting up what bankers expect to be a record year for corporate debt issuance driven by AI investment and merger financing, the Financial Times reported.

Investment-grade borrowers sold more than $95 billion across 55 deals in the first full week of January, marking the busiest opening to a year on record and the largest weekly total since mid-2020, according to LSEG.

Banks and European issuers led the surge, capitalizing on strong demand for high-quality dollar bonds that has pushed credit spreads near their tightest levels relative to Treasuries since the global financial crisis. Bankers say companies are moving earlier than usual to avoid congestion later in the year as funding needs rise.

Morgan Stanley estimates investment-grade issuance could reach $2.25 trillion in 2026, exceeding the prior record set during the pandemic, according to the FT.

Several deals were heavily oversubscribed. Orange raised $6 billion after drawing more than $34 billion in demand, while Sumitomo Mitsui Financial Group and Broadcom raised $5 billion and $4.5 billion, respectively.

Markets showed little concern over recent geopolitical shocks, and investor appetite for corporate debt remains strong. Investment-grade borrowing costs are hovering less than one percentage point above Treasuries, reflecting confidence in corporate balance sheets.

Issuance has also been brisk in Europe, with Enel, Veolia, and L’Oréal all bringing multi-billion-euro deals to market. Analysts expect U.S. high-grade corporate earnings to have grown by double digits in the fourth quarter.

Insurers and pension funds are adding to demand as they seek to lock in yields ahead of expected Federal Reserve rate cuts. Still, some investors are growing cautious, warning that the sheer volume of deals could eventually test demand and widen spreads later in the year, the FT reported.