As surprising as it may be, US corporations seem to have discovered a gold mine. The primary US investment-grade corporate bond market logged its busiest first quarter on record. Companies managed to raise a record of $529.5 billion, beating the previous record of $479 billion set in the similarly calm first quarter of 2020.
The March issuance of $142.2 billion exceeded expectations. Analysts were probably a bit speechless watching the steadily strengthening spreads, which were only growing during the quarter.
What spurred this relentless appetite for borrowing? The fact is that “multi-billion-dollar bond offerings to fund mergers and acquisitions helped fuel the borrowing binge,” Bloomberg explains. Well, it looks like we are set to witness a further increase in debt sales until the very end of the year.
A prime example of the current trend is Home Depot, Inc. It announced its intention to take on $12.5 billion in debt in order to realize its purchase of building-products distributor SRS Distribution Inc. “High quality debt issuance is back in vogue,” Bloomberg Intelligence analyst Robert Schiffman wrote.