corporate bond market — where the most creditworthy U.S. companies borrow money — was one of the worst in history. This year: There aren't enough bonds to go around.A possible end to the current rate hike cycle — and the downward pressure those hikes put on bond prices — isThat means that “all the pain that was caused last year by the Fed hiking is about to stop,” Matt Brill, Invesco's U.S. head of investment grade credit, tells Axios.
The pending Fed pause, plus the higher absolute yields that IG bonds now offer — more than 5% on average — are luring investors back into credit. “We’re seeing inflows pick up, versus outflows last year. And all of a sudden, there's not enough bonds to go around, which is kind of crazy,” Brill says.So far this year, a quirk in collective bond issuance is igniting even stronger bids in the secondary market, where $10 trillion worth of IG bonds trade.Corporate execs seem to think that rates will come back down soon-ish — so they're shying away from issuing longer-term bonds that lock in current market levels.