The Financial Times reported on Saturday that global corporate debt sales have surged to an unprecedented $8 trillion this year. This milestone highlights how companies have leveraged strong demand from investors to expedite their borrowing strategies, according to the Financial Times.

According to data from LSEG, corporate bond and leveraged loan issuance grew by over 33% from last year, reaching $7.93 trillion. Major corporations like AbbVie and Home Depot seized the opportunity presented by borrowing costs that hit their lowest levels in decades relative to government bonds. The activity eclipsed previous records set in 2021, with investor enthusiasm driving down borrowing expenses even before central banks started reducing interest rates from their historically high levels.

"Markets are firing on all cylinders, and then some," remarked John McAuley, Citigroup's head of debt capital markets for North America, according to FT. Initially, firms aimed to secure funding ahead of potential volatility tied to the US election, bankers explained. But after the post-election environment saw spreads tighten further following former President Donald Trump's decisive win, many companies chose to secure funding for the upcoming year or even further ahead.

Tammy Serbée, Morgan Stanley's co-head of fixed-income capital markets, observed this shift, stating, "Initially it was just about 'let's de-risk our funding for the year.' Then it was, 'Actually conditions look pretty attractive, why don't we just pull forward 2025 as well?'"

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AbbVie, for instance, raised $15 billion in February through an investment-grade bond sale to fund acquisitions of ImmunoGen and Cerevel Therapeutics. Other notable issuers included Boeing, Bristol Myers Squibb, Cisco Systems, and Home Depot.

The average spread for US investment-grade bonds briefly dropped to 0.77 percentage points following the election, marking the narrowest gap since the late 1990s, according to Ice BofA data. While spreads have slightly widened since then, they remain close to their tightest levels. High-yield corporate bonds experienced a more significant increase in spreads, though they also remain near multi-year lows.

Debt Surge

Despite narrow spreads, overall borrowing costs remain higher compared to three years ago due to elevated Treasury yields, with investment-grade corporate debt yielding 5.4%, up from 2.4% in 2021. These yields have attracted a record $170 billion in inflows into corporate bond funds globally in 2024, according to EPFR data.

Dan Mead, Bank of America's head of investment-grade syndicate, reflected on the remarkable issuance volume, calling it the busiest year for high-grade borrowing since 2020's pandemic-induced rush. "We put out an estimate for each month about what we expected supply should be... and every month the actual supply has exceeded [them]," he said.

Looking ahead, many bankers anticipate continued borrowing activity as firms refinance pandemic-era debt and pursue new financial strategies. Marc Baigneres, global co-head of investment-grade finance at JPMorgan, noted, "Activity will remain steady," but added that large-scale, debt-financed mergers and acquisitions could be a key factor to watch, the Financial Times wrote.

Some experts remain cautious about the outlook. Maureen O'Connor, global head of Wells Fargo's high-grade debt syndicate, warned, "The market is pricing almost no downside risk right now. With spreads priced to perfection, you are seeing idiosyncratic risk pick up." This raises concerns that the borrowing boom could slow if market conditions shift significantly.

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