US investment-grade debt issuance tops $1 trillion on back of Fed purchases

Spencer Platt/Getty ImagesWall Street stands empty as people stay away from the area due to the coronavirus on March 30, 2020 in New York City.
  • US investment-grade bond issuance topped $US1 trillion on Tuesday as the corporate-credit market rebounds from March lows.
  • High-grade issuance on Tuesday reached $US11.2 billion across 11 deals, Bank of America strategists said in a note.
  • Year-to-date bond offerings trounce last year’s pace, as companies issued roughly $US1.14 trillion in investment-grade debt throughout 2019, according to the Securities Industry and Financial Markets Association.
  • The issuance frenzy comes after the Federal Reserve’s historic move into corporate-debt purchases drove investors back into risk markets.
  • Visit the Business Insider homepage for more stories.

US investment-grade companies have issued more than $US1 trillion in debt in the year-to-date, offering bonds at a voracious pace as the coronavirus pandemic lifts cash demand.

High-grade issuance on Tuesday reached $US11.2 billion across 11 deals, Bank of America strategists said in a note. The single-day sum brings the year’s total to $US1.003 trillion. Nearly $US200 billion in debt has been issued in May so far as companies capitalise on growing risk-on attitudes.

The bond frenzy is far more intense than in the year-ago period. Investment-grade firms offered $US1.14 trillion in investment grade debt through all of 2019, according to the Securities Industry and Financial Markets Association.


Read more:
RBC handpicks 8 tech stocks that could continue to grow revenues during the crisis and are built like ‘rocket ships’ for the next boom

The corporate bond market has enjoyed a sharp recovery from initial coronavirus-fuelled lows following unprecedented Federal Reserve intervention. The central bank announced on March 23 it would issue debt to large companies through direct bond purchases and by taking in corporate-credit exchange-traded funds. The announcement buoyed the tumbling sector and the stock market through April and into May.

The monetary policy announcement also boosted inflows to investment-grade bond funds and ETFs over recent weeks. March saw record amounts of cash pulled from the credit market as investors flocked to US Treasuries.

BOND FLOWSBank of America

The Fed’s ETF purchases began on May 12. The monetary authority’s program for direct bond purchases should be operational by June, chair Jerome Powell said during Tuesday Senate testimony.


Now read more markets coverage from Markets Insider and Business Insider:



Another stimulus bill is likely needed to revive the economy, Dallas Fed president says



Hedge fund bear Crispin Odey says personal gold ownership could become illegal if inflation spikes



The world’s biggest hedge funds like Bridgewater are blending quantitative and fundamental trading. Here’s why it’s gaining hype on Wall Street.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.