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Business News/ News / Frenzied Company Bond Sales Show Few Signs of Letting Up in US
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Frenzied Company Bond Sales Show Few Signs of Letting Up in US

The day after Easter is often quiet for company bond sales in the US, but it’s proving to be anything but on Monday.

Frenzied Company Bond Sales Show Few Signs of Letting Up in USPremium
Frenzied Company Bond Sales Show Few Signs of Letting Up in US

(Bloomberg) -- The day after Easter is often quiet for company bond sales in the US, but it’s proving to be anything but on Monday. 

Adobe Inc. is in the high-grade market looking to raise cash to help pay for capital expenditures, stock buybacks and acquisitions, one of seven companies selling notes. Japanese e-commerce company Rakuten Group Inc. is selling a $1.25 billion junk bond to repurchase notes that mature this year and further out, one of four deals in the market. 

In leveraged loans, seven new deals kicked off, including a $1.25 billion offering to fund Endo International Plc’s exit from bankruptcy, and a $400 million loan from private prison operator Geo Group Inc.

It’s unclear how long the frenzied activity will continue. First-quarter sales broke records in investment-grade corporate bonds, while for high yield, activity was the highest since 2021. But issuance activity often tapers off in April, particularly after the Easter holiday. 

“We may continue to see supply surprise to the upside, as a combination of M&A activity and insatiable demand from investors to lock in relatively attractive all-in yields before the Fed decides to implement its easing program," said David Schiffman, lead portfolio manager for the Aquila High Income Fund at Aquila Investment Management.      

Corporate finance chiefs are taking advantage of low risk premiums, and are often looking to borrow ahead of risks like the US election and more potential geopolitical conflict that could lift bond spreads and overall financing costs.   

Strong investor demand has also given companies confidence to move forward with sales. Leveraged loan prices have stabilized around a two-year high, which is also encouraging corporations to borrow.  

Bank of America Corp. expects investment-grade supply to slow this month, strategists led by Yuri Seliger wrote in a note last week. Their supply target is for $100 billion to $110 billion. TD Securities Inc. strategist Hans Mikkelsen also expects “further moderation of issuance," he wrote in a note. For April, the banks expect $110 billion to $120 billion with a bias toward shorter maturities compared with March. 

Even in structured finance activity has been relatively strong, GM Financial is premarketing $1.32 billion of prime auto loan asset-backed securities while a separate $110 million equipment finance loan and lease asset backed offering from Commercial Equipment Finance is also in the queue.  

--With assistance from Michael Tobin, Nataly Pak, Gowri Gurumurthy and Immanual John Milton.

(Updates with headlines at the bottom of the story)

More stories like this are available on bloomberg.com

©2024 Bloomberg L.P.

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Published: 02 Apr 2024, 01:30 AM IST
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