A Barclays Plc bank branch in Maidstone, UK, on April 25, 2025. Photographer: Chris Ratcliffe/Bloomberg.
More than a dozen companies capitalized on a broader market rebound and falling borrowing costs to raise $15.1 billion yesterday, before an expected late-summer slowdown in the U.S. investment-grade market.
Barclays Plc and KKR & Co. are among 13 companies that tapped the high-grade market, making yesterday the busiest day by number of issuers since May 12, according to data compiled by Bloomberg. It’s the most active since July 21 by sales volume.
A key gauge of perceived credit risk in the high-grade market improved yesterday, after surging on Friday by the most since May following a weak jobs report and new tariffs. Funding costs, meanwhile, are relatively attractive. The average U.S. high-grade yield-to-worst, a measure of borrowing costs, fell to 4.94 percent at Friday’s close, the lowest since October 18.
“Especially given the rates move from last Friday, issuers are very much incentivized to announce deals today to take advantage of lower rates,” Lenny Zhang, a portfolio manager at Voya Investment, said yesterday. “The market is fully open.”
It makes sense for companies to issue now, as the current supportive backdrop could reverse very quickly considering concerns around the Federal Reserve, trade policies, and the health of the economy are all still in play, according to Scott Kimball, chief investment officer at Loop Capital Asset Management. “If you’re an issuer, especially in investment grade, why play chicken with time and volatility?” said Kimball.
Syndicate desks are expecting between $25 billion and $30 billion of high-grade issuance this week, and $95 billion for all of August, with most of the issuance expected in the first two weeks of the month before the typical mid-August lull sets in. The last two weeks of the month are historically a “dead period” for issuance, added Kimball.
The high-grade market is likely poised for a third consecutive month of negative net supply after subtracting maturities of $71 billion and coupons of $35 billion expected in August, JPMorgan Chase & Co. credit strategists led by Eric Beinstein and Nathaniel Rosenbaum wrote in a note yesterday. July investment-grade primary issuance closed at a disappointing $81.4 billion, by far the slowest month this year, according Bloomberg-compiled data. “Lower yields and concerns about economic growth are headwinds for spreads,” wrote the analysts. “For high-grade credit, however, the broader technical support for the market remains in place.”
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