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Companies are borrowing in the US bond market at the fastest pace since the Covid-19 pandemic, as Wall Street kicks off what is expected to be a record year of debt sales thanks to AI spending and financing for a wave of mergers.
Corporate borrowers raised more than $95bn from 55 investment-grade bond deals in the first full week of January, the highest weekly volume since May 2020 and the busiest start to a year on record, according to LSEG data.
Financial institutions and European groups were among the week’s largest issuers, as companies took advantage of strong investor demand for high-quality dollar debt that has pushed borrowing costs close to their lowest level relative to US Treasuries since the global financial crisis.
“Everyone is extremely motivated to get back to the market,” said Teddy Hodgson, global co-head of investment-grade debt capital markets at Morgan Stanley.
While January has typically been a busy month for new bond issuance, many companies are starting their funding programme even earlier than usual this year to get ahead of an expected issuance glut this year to finance M&A activity and big tech companies’ AI infrastructure, Hodgson said.
Morgan Stanley forecasts investment-grade bond sales this year of $2.25tn, eclipsing the 2020 record of $1.9tn.
Many bond offerings during the week were significantly oversubscribed. French telecoms company Orange raised $6bn after attracting an order book of more than $34bn across five tranches of debt, according to people familiar with the transaction. Japan’s Sumitomo Mitsui Financial and US chipmaker Broadcom also raised $5bn and $4.5bn, respectively.
The new year issuance boom came as markets largely shrugged off the dramatic US capture of Venezuelan President Nicolás Maduro. Investors continue to attach little risk premium to US corporate debt, with the cost of borrowing for investment-grade companies at just 0.79 percentage points above government debt, according to Ice BofA data.
“The market just shrugged it off because there’s so much cash out there, and investment-grade fundamentals continue to be strong,” said Kyle Stegemeyer, head of investment-grade debt capital markets and syndicate at US Bancorp.
Europe’s market for investment-grade debt has also had a busy start to the year, with Italian energy company Enel SpA and French waste management firm Veolia both pricing deals worth at least €2bn this week, while cosmetics manufacturer L’Oréal issued a €1.75bn bond.
Earnings of US high-grade issuers are expected to have grown 11.2 per cent in the fourth quarter of 2025, according to Bank of America estimates.
Insurance companies and pension funds are also piling into high-grade bonds to lock in higher long-term yields ahead of further rate cuts by the Federal Reserve this year.
“As long as insurance and annuity policies continue to be written, you’re going to see capital that needs to be deployed in our market,” said John Sales, head of investment-grade debt syndicate at Goldman Sachs.
Still, the slim extra yields that corporate debt offers relative to ultra-safe Treasuries are keeping some investors on the sidelines.
“The number of deals is overwhelming and there will eventually be investor fatigue,” said Neil Sun, a portfolio manager at RBC BlueBay Asset Management. “We are building up cash buffers to capture opportunities at wider [credit] spread levels.”
“It’s like going to a buffet. People always get too excited for the first couple of bites,” Sun said.