The Strategist

FT: Corporations are rushing to issue bonds before the US elections

04/02/2024 - 06:46

Many businesses are reportedly in a "hurry" to obtain money from the bond market prior to the US presidential election in November, writes the Financial Times.

According to LSEG, $806 billion worth of dollar bonds have been issued since the year's commencement. 

This is the highest since 1990 and is 40% greater than it was during the same time last year. According to bankers and investors cited by the Financial Times, the corporations are acting in this way because spreads—the difference between the yields on US corporate and government bonds—are currently among the lowest in a long time.

The election outlook is further pushing corporations to issue bonds now rather than next year, when corporate borrowing may become more expensive, according to bankers. 

Furthermore, many investors have noticed that issuers are currently seeking more time to profit from the current state of the market before the Federal Reserve is anticipated to start reducing interest rates in the middle of the year.