Investment-grade companies set off the strongest wave of early financing in history, and the scale of US dollar bond issuance reached a new high since the COVID-19 pandemic

US investment-grade companies are setting off the most intense wave of dollar bond financing since the beginning of the COVID-19 pandemic.

The Zhitong Finance App learned that according to data, the issuance scale of high-rated US dollar corporate bonds this week has soared to 88.4 billion US dollars, the highest level in a single week since May 2020. At the same time, it also hit a record high in early January, which is significantly higher than the previous average estimate of about 70 billion US dollars by traders.

This hot start is seen as a forward-looking sign of the trend for the whole year. Many major Wall Street banks, including Morgan Stanley and J.P. Morgan Chase, forecast that the scale of investment-grade bond issuance is expected to reach a record high in 2026. Against the backdrop of falling borrowing costs, companies are speeding up long-term capital to be used in mergers and acquisitions and data center construction to support the core of the artificial intelligence boom.

The popularity of bond financing is not limited to the US market. On the European side, the amount of capital raised by issuers through bond sales on Wednesday also set a record; from a global perspective, total bond issuance surpassed 200 billion US dollars for the first time in the first week of this year, indicating a marked recovery in the willingness of global companies to finance.

Strong investor demand has become an important driving force for this round of issuance. According to the data, the subscription ratio for many corporate bonds issued in the US market on Tuesday was about four times the issuance scale. Among them, France Telecom operator Orange SA had a long-term bond of 500 million US dollars due in 2056. The subscription demand even exceeded the issuance scale by 15 times, highlighting investors' preferences for long-term assets.

At the same time, the premium for issuing new bonds that enterprises need to pay to attract investors (compared to similar stock bonds) has declined markedly, further reducing financing costs and increasing development momentum.

Another factor driving the surge in dollar bond issuance comes from “Yankee bonds” (dollar bonds issued by foreign companies in the US). European banks, including Crédit Agricole and Société Générale, have taken the lead in financing in the US market. The market expects that after major US banks release financial reports next week, US banks will follow up on issuing bonds one after another.

In terms of industry distribution, the energy, utilities and auto finance sectors have become important distribution forces. Energy giants such as Total (TTE.US), the utility company Public Service Group (PEG.US), and financing subsidiaries of General Motors (GM.US) and Ford Motor Company (F.US) have all joined this round of intensive debt issuance.

Analysts pointed out that due to a combination of factors such as falling interest rates, rising investor risk appetite, and continued progress in the AI investment cycle, the investment-grade bond market may usher in an unusually active year.