Hot Corporate Bond Market Puts Buyers’ Strike on Ice

Peak bond-issuance week is in the books, and high-grade corporate bond deals are hanging tough in the face of recession fears and surging risk-free rates, a trend that appears to be extending into the second week of September. It’s a sign that the market remains open for the companies that need it, welcome news for businesses hoping to avoid the risk of a liquidity crunch. If the US is set for a downturn, it won’t be the bond market’s fault.

The week after Labor Day — Week 36 — is often the busiest time of the year for the purveyors of new corporate bonds, and the past week and change haven’t disappointed. Investment-grade issuers sold more than $54 billion in bonds last week, led by retailers and financial companies. Walmart Inc., Target Corp. and TD-Dominion Bank were among the companies that were active. Although it was just average by Labor Day week standards, the showing will come as a relief in a year that has experienced historic drawdowns in the bond market and spotty business for underwriters. Year-to-date investment-grade issuance in the US is down about 7% compared with the previous five-year average, but this important week ended up matching recent precedent.