May 10 (Reuters) – Several of the world’s largest companies raised billions of dollars in new debt this week and last, in a mini-resurgence of a primary corporate bond market that had been held back by the US regional banking crisis and recession concerns.
On Monday, 11 companies led by iPhone maker Apple (AAPL), wireless carrier T-Mobile (TMUS) and drugmaker Merck (MRK), issued USD 22.55 billion in bonds. The sales followed a similar 11-deal flurry of debt sales on May 1 led by Facebook parent Meta Platforms (META) and Comcast (CMCSA).
So far in May these and other high-grade companies have raised a total of USD 57.5 billion, on pace to beat last month’s USD 65.7 billion, which was the slowest April in a decade, according to Informa Global Markets data.
“Corporate bond spreads have retraced from the widening we saw immediately post banking and initial banking failures, so companies are saying now’s a good time to come,” said Natalie Trevithick, head of investment grade credit strategy at investment management firm Payden & Rygel.
The average investment-grade bond spread on Tuesday was 149 basis points over Treasuries after reaching a high of 164 basis points on March 15, according to ICE BAML data.
“This month we have seen a wave of issuance from large companies as they have cleared earnings blackouts and are facing a reasonably steady rate backdrop,” said Blair Shwedo, head of investment grade trading at US Bank.
But spreads remained higher than a February low of 120 basis points, as uncertainty surrounds the direction of Federal Reserve monetary policy and lawmakers on Capitol Hill remain deadlocked over a bill to prevent default on trillions of dollars in US government debt.
Monday’s supply was met with strong investor demand. The bonds received USD 61.25 billion in orders, almost triple the amount sought.
On Tuesday, however, just four high-grade companies sold new debt led by BP Capital Markets America, while four others postponed plans, according to Informa data.
The companies also rushed out on Monday to get ahead of any further market volatility that could come after the release this week of the latest US inflation data, according to market participants.
But consumer price index data on Wednesday came in line with market expectations, which could lead to favorable conditions for new bond issuance.
“A worse-than-expected inflation report would complicate issuer plans to tap the market, however, that risk has gone away with this morning’s data release,” said Andrzej Skiba, head of BlueBay US fixed income at RBC GAM.
“We see well over USD 30 billion of new issue supply next week in US investment grade, with upside risk to that number if some of the M&A-related supply decides to tap the market,” he said.
(Reporting by Matt Tracy; editing by Shankar Ramakrishnan and David Gregorio)