Company Bond Market Booms After Fed Fee Minimize in September

September was a banner month for US investment-grade bond issuance as firms rushed to borrow in a market benefiting from falling rates of interest and tight threat premiums.

PitchBook tallied $56.4 billion in new bonds by the primary week of September, with the month’s whole swelling to over $172 billion. The surge adopted the Federal Reserve’s fee reduce of 25 foundation factors at its Sept. 16-17 assembly. Decrease borrowing prices make it cheaper for firms to fund acquisitions or shore up company coffers. On Sept. 18 alone, a minimum of 9 company issuers raised practically $15 billion in bonds.

“That was a busy day,” says Nick Elfner, co-head of analysis at Boston-based fastened earnings supervisor Breckinridge Capital Advisors. The investment-grade bond market has repeatedly demonstrated its capability to satisfy company funding wants, he provides, significantly when circumstances are comparatively steady and investor demand runs robust.

Take AT&T, for instance. The telecom launched a four-part note-offering totaling $5 billion, with proceeds earmarked for common company functions together with refinancing maturing debt and funding pending acquisitions. BNP Paribas, Financial institution of America, Citigroup, JPMorgan, and Mizuho served as arrangers.

The identical week, one other group of world banks together with Deutsche Financial institution, Goldman Sachs, and HSBC led an $18 billion bond deal for Oracle Corp.

The flurry of offers marks a shift from the beforehand cautious panorama, the place uncertainty round rates of interest, inflation, and President Donald Trump’s intermittent tariff bulletins had restrained bond issuance and widened credit score spreads.

But, US issuers should not the one ones capitalizing on cheaper debt. Reuters pulled knowledge from LSEG to indicate that issuance of “Maple bonds” by overseas debtors reached $16.32 billion as of Sept. 25, surpassing final 12 months’s $16.28 billion and outpacing all of 2024, which totaled $13 billion. Extra aggressive Financial institution of Canada coverage, together with low yields and tight threat premiums in each the US and Canada, is creating a positive setting for firms to speculate and broaden whereas traders stay keen to offer capital.

“We expect robust company bond issuance can proceed,” Elfner says. Decrease borrowing prices may also enable for corporates to refinance debt and, maybe, undertake tasks that will have been mothballed on account of increased financing prices.