“The U.S. corporate bond market plays too important of a role in global investment portfolios for the turmoil of April to make a significant dent in demand.”
Companies must decide whether to issue now, when rates are higher but tariffs are paused, or wait until autumn, when rates are expected to fall but tariffs may have kicked in.
Risk premiums in the CCC tier of the bond market have jumped more than 150 basis points this year. Still, some argue spreads aren’t yet fully reflecting concerns about growth, trade, and geopolitics.
The relentless rise in government bond yields in the United States and around the world may represent the “new normal” for both investors and companies.
“Issuers are taking advantage of calm markets, low volatility, and tight spreads before Trump’s tariffs might spoil the party. ... For a record amount of issuance, there must also be a large amount of investors ready to put money at work. This is indeed the case.”
S&P and Moody's are both considering downgrading the planemaker to junk. If they do, much of Boeing's $52 billion in outstanding long-term debt would be ineligible for inclusion in investment-grade indexes.
The average yield in the U.S. investment-grade and high-yield bond markets fell following the Fed's move, making borrowing more attractive for issuers.
Borrowing costs have become compelling, as markets are already pricing in expectations for reduced interest rates. And several external factors could reverse that trend.
