The Zhitong Finance App learned that Wall Street traders have previously prepared for the possibility that US investment-grade corporate bond sales in September will set a record, and the recent rise in yield may prompt blue-chip companies to issue bonds before financing costs rise further.
Currently, the average yield on US investment-grade bonds has exceeded 5.5%, reaching the highest level in more than two years. Tom Murphy, head of investment-grade credit bonds at Columbia Threadneedle Investments, said that higher yields combined with the future issuance of huge bonds in the technology industry may prompt companies to lock in current borrowing costs.
“If I'm the CFO or treasurer, and I need financing in 2027, I'm likely to advance my debt issuance plan to 2026.” Murphy said.
The risk of waiting is that yields on US government bonds may continue to rise, while credit spreads on corporate bonds compared to US treasury bonds may widen, further driving up corporate financing costs. According to the data, interest spreads on corporate bonds are still relatively low, averaging less than 0.8 percentage points for most of this week.
Moshe Tomkiewicz, head of investment grade debt capital markets at Mizuho America, said: “Despite high interest rates, the current situation is almost 'the two harms weigh the lighter' — you would rather issue bonds while the credit spread is still relatively small than wait, so as not to impact the valuation due to an increase in supply in the second half of the year.”
The amount of bonds issued by US companies in September may break a record; Wall Street predicts a maximum of 250 billion US dollars
According to a previous survey, traders expected the issuance of US investment-grade bonds to be around US$215 billion in September, which is higher than the record for the same period of US$207.5 billion in history set in September last year. Some Wall Street traders are even forecasting a circulation of $250 billion.
Half of the first eight months of 2026 (that is, four months) of investment-grade bond supply set a monthly record. Among them, the past three months were particularly prominent. The current total issuance volume is 7.6% higher than the same period in 2020. Affected by the pandemic, the circulation volume for the full year of 2020 was about 1.75 trillion US dollars, setting an annual historical record.
Publicly syndicated bond sales around the world have continued to grow at a record rate. One of the factors driving the growth of the US primary market is financing by technology companies to invest in artificial intelligence. This growth is likely to continue given the estimated trillions of dollars in AI-related spending.
Meanwhile, global bond yields have reached their highest level since 2008, and the debt market has been extremely active in the past few weeks, even though it was a seasonally low season.
In terms of the European market, it became active again after the summer off-season ended in mid-August, making it the busiest start in history. Since then, sales volume has exceeded 40 billion euros (about 46 billion US dollars) for three consecutive weeks. The issuance volume of US investment-grade bonds as of Wednesday was $8.3 billion, the highest level since at least the week before the Labor Day holiday since 2019.
At the peak of supply, investor demand showed fatigue
However, the other side of large-scale supply is that investor demand showed signs of weakening in August.
Lesia Paisley, portfolio manager for MacKay Shields' global fixed income team, said: “We believe that in this historic wave of bond issuance, it is necessary to exercise caution and discipline, and to exercise restraint in selecting targets and requiring reasonable compensation, especially in the short term.”
However, not all Wall Street institutions are convinced that this month will usher in a wave of bond issuance. Bank of America strategists Yuri Selig and Sohyun Marie Lee pointed out this week that many large tech companies may choose to wait and see in September after completing large-scale debt issuance in recent months.
Bank of America expects investment grade issuance to be around $190 billion in September. Even so, it will be the second-highest issuance volume in history for the month.
Research firm CreditSights pointed out in a recent report that some buyer investors may eventually face problems with portfolio concentration restrictions. Investment-grade buyers usually allow their money managers to invest up to 3% to 5% of their assets in a single company's bonds.
Although large-scale technology companies such as Alphabet and Amazon both issued bonds this year, they each accounted for less than 3% of Bloomberg's US High-Rated Corporate Bonds Index.