Record US$2.6 Trillion Corporate Debt Issuance Splurge
(17 September 2020 - Global) The COVID-19 pandemic has turbo charged a record global corporate bond splurge of US$2.6 trillion according to Bloomberg analysis.
Institutional enterprises have sold $2.61tn of notes so far this year across all currencies, surpassing historical full-year records as central bank bond purchase programs simplified access for corporates to raise funding in debt capital markets (DCM). The coronavirus pandemic has fuelled a rush to lock in equity, with firms selling the most debt ever in 2020 across the glove. The coronavirus pandemic has resulted in reserve banks aggressively expanding money supply and slamming yields to historic lows. Under that scenario, companies sold a record volume of bonds this year.
The average risk premium of US invested dollar bonds has fallen from a ten year high of 3.73 percentage points at the end of Q1 2020 to only 1.29 percentage points as of Q3 2020 according to Bloomberg Barclays index data.
“Companies have raised so much money in recent months that the current rate of issuance could slow down later in the year. If these funds are slowly emptied by operational cash needs, issuance would be expected to be very modest for the rest of the year" stated Americas at Schroder Investment Management Director of Credit Research, David Knutson.
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