Corporate borrowers in the U.S. have boosted the average maturity of their bonds to the most since at least the 1990s as borrowing costs slump, reducing the risk that they will be exposed to a sudden rise in interest rates.
The average 16.4-year maturity last quarter on new corporate bonds tracked by the Securities Industry & Financial Markets Association is up from the average of 10.7 years and the highest in data going back to 1996. American International Group Inc., the insurer that just more than six years ago was the recipient of a $182.3 billion government bailout, raised 40-year debt on Jan. 12 in its longest-dated bond since 2007.
"Companies are getting a great deal right now," Scott Minerd, who oversees $210 billion as the global chief investment officer at New York-based Guggenheim Partners LLC, said in a telephone interview. "It's a rare moment in history where we are in an extremely low-yield environment at a time when investors really need it. We should see a flurry of long-term borrowing continue."
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