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Firms bought $7.93 trillion value of bonds final yr, up by greater than a 3rd from a yr earlier.
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Surging company borrowing comes amid elevated investor demand and low borrowing prices.
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Company giants like AbbVie, Cisco, and Bristol Myers Squibb tapped the debt markets to assist fund acquisitions.
World company borrowing surged to a report in 2024 as corporations took benefit of elevated investor demand and low borrowing prices to problem a mountain of recent debt.
In response to LSEG knowledge cited by the Monetary Instances, corporations bought $7.93 trillion of bonds final yr, up by greater than a 3rd from a yr earlier.
The deluge of company bond issuance marks a brand new excessive, shattering the earlier annual issuance report set in 2021 earlier than the Federal Reserve began to boost rates of interest to tame inflation.
The gross sales in 2024 got here because the Fed and different international central banks started decreasing rates of interest. Upon the Fed’s first rate of interest lower of the yr in September, international buyers flocked to US company bonds on the quickest tempo in six months following two-consecutive months of outflows from the sector, a latest notice from Citi mentioned.
Even earlier than the Fed’s easing cycle, sturdy demand from buyers additionally helped carry down prices, as high-grade company debt neared its most secure degree in almost a decade.
Company giants rushed to take benefit, typically seeking to bond gross sales to assist fund acquisitions.
Pharma large AbbVie bought $15 billion in investment-grade bonds final February, serving to fund acquisitions of ImmunoGen and Cerevel Therapeutics, whereas Cisco raked in proceeds of almost $14 billion from a bond sale in the identical month to partially finance its $28 billion acquisition of Splunk.
Bristol Myers Squibb, in the meantime, bought $13 billion in bonds to assist fund two different acquisitions.
Going ahead, the outlook for company borrowing is barely murkier.
Latest hawkish commentary from Fed officers has harm hopes for vital financial easing in 2025. Merchants are actually penciling in only one or two extra cuts over the course of the yr amid issues over sticky inflation.
Citia analysts mentioned they anticipate a resilient US economic system to assist present additional development for investment-grade bonds total, although.
“Resilience in U.S. financial exercise, regardless of still-restrictive financial coverage, raises the probabilities from our prior baseline that U.S. IG EBITDA development can maintain tempo (within the mixture, at the very least) with what we anticipate can be punchy development in web company IG debt,” they mentioned in a December notice.
The common unfold for investment-grade bonds dipped to its narrowest degree in over twenty years proper after the election, and has widened solely barely since, in keeping with Ice BofA knowledge cited by the Monetary Instances.
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