The amount of high grade corporate debt issued so far this year has surpassed $1 trillion, double the pace of last year.
A person wearing a face mask walks along Wall Street after further cases of coronavirus were confirmed in New York, March 6, 2020.Corporations, borrowing at more than twice last year's pace, have already raised more than $1 trillion as they race to restructure older debt, pay down bank lines and raise cash to weather the recession.
"Interest rates are low and even though the spreads they're paying are higher than they were paying in February, it's still long-term cheap money," said Andrew Brenner of National Alliance. Companies have been restructuring debt, terming out credit lines and raising cash to protect against shortfalls.
Foreign investors looking for yield and domestic institutions and individuals have been steady buyers of corporate debt. For the week ended May 27, investment grade bond funds took in $7.5 billion. High yield bond funds are in high demand and had their third best week ever, taking in $6.3 billon, according to Refinitiv Lipper data. The best two weeks for inflows were both in April.
I'm sure this ends well.
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