A pedestrian near the New York Stock Exchange in New York City on April 10, 2025. Photographer: Michael Nagle/Bloomberg.
The U.S. investment-grade primary bond market had its busiest May since 2020, as easing tariff pressure spurred companies to borrow while they can, a trend that may continue this month.
Six firms raised $4.9 billion last Thursday, bringing May’s volume to roughly $153 billion, according to data compiled by Bloomberg News. That’s the most for the month since May 2020, when the Federal Reserve slashed interest rates to help bolster the economy during the pandemic and high-grade firms issued a record $243 billion.
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In April, U.S. President Donald Trump announced tariffs that raised investors’ fears of a global trade war, sending financial markets into turmoil and spurring many companies to hold off on issuing debt. Since then, many of those import levies have been delayed or blocked. Large U.S. companies were already feeling some pressure prior to the Trump administration’s sweeping tariffs, with profits falling in the first quarter by the most since 2020. Firms that are more insulated from the levies have managed to maintain or even boost their capital expenditure plans while others are lowering, withdrawing, and in some cases providing dual guidance, depending on the slowdown in the economy.
The uncertainty means some companies are issuing more now, while they can, according to Sonali Pier, multi-sector credit portfolio manager at Pacific Investment Management Co. The money manager expects the Federal Reserve to start cutting interest rates in September, adding that not all issuers can afford to wait until then. “That’s the tradeoff,” said Pier in an interview last Thursday. “Deciding whether to issue in advance and shore up the balance sheet—or to wait and see what actually comes to fruition post the 90-day pause in terms of tariffs.”
Investment-grade spreads—a measure of borrowing costs relative to Treasuries—have narrowed sharply to levels seen before Trump announced steep new tariffs in early April. That’s encouraging more spread-focused companies, such as financial institutions, to take advantage of this attractive funding environment, according to Kyle Stegemeyer, head of investment-grade debt capital markets and syndicate at U.S. Bank.
A strong redemption calendar this month is also helping recycle substantial cash back into credit, boosting demand, Stegemeyer said. The banker is expecting above average supply to persist in June if broader macro conditions remain constructive. “With tariffs temporarily on hold, we expect the pull-forward trade to continue in the near-term, as borrowers get ahead of potentially more macro volatility and downside risks to spreads in the second half of the year,” said Stegemeyer.
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