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Investment-Grade Corporate Giants Suddenly Sell Huge Amounts of Debt to Front-Run Even Higher Long-Term Yields

September 12, 2023

by Wolf Richter Wolf Street

Corporate issuance further pressures longer-term Treasury yields, amid expectations of bad inflation “surprises.” Share buybacks getting a lot more expensive, but no problem either.

Why would corporate giants suddenly pile into the corporate bond market with large-scale new issuance in September at these high interest rates? Why not wait for that Fed pivot and rate cuts that must be coming any moment, no?

Because they want to lock in these interest rates that they can still get, before rates rise even further. These companies are not betting on rate cuts. A year ago, they bet on rate cuts that didn’t come. Now they bet on higher for longer – on higher inflation and higher long-term interest rates for longer – and they’re issuing bonds at a red-hot pace in September before rates go even higher.