US High-Grade Bond Sellers Eye $125 Billion in September Deals
(Bloomberg) -- Companies are poised to sell about $125 billion of US high-grade bonds next month, according to an informal survey of banks that underwrite the debt, as the average high-grade yield continues to fall and borrowers work to get ahead of the US presidential election.
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A good chunk of September’s estimate could come in the first three sessions following the Labor Day holiday, which falls on Sept. 2 this year. The week following the holiday is usually one of the busiest of any year — borrowers priced $55 billion that week in 2023, according to data compiled by Bloomberg.
The preliminary forecast, which could be revised as September gets started, is in line with last September’s $124.1 billion of bond offerings. The five-year average for September is $136 billion.
JPMorgan Chase & Co. on Wednesday said it’s expecting $149 billion of new supply next month as it lifted its 2024 forecast by $50 billion to $1.5 trillion due to non-financial sectors.
Borrowing costs are enticing for companies now, benefiting those that have pulled forward deals before the Federal Reserve begins cutting interest rates and the upcoming US presidential election. The average yield on a US investment-grade bond stood at 4.88% on Wednesday, the lowest since February 2023.
Most of September’s deals could price before the mid-month Federal Reserve meeting, at which the first of multiple interest-rate cuts are expected. Fed-fund futures currently predict policymakers will cumulatively lower rates by either 75 or 100 basis points this year.
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