Firms Avoid Long-Dated Bonds as US Yields Rise
Corporate issuers are increasingly avoiding long-dated bond offerings due to surging U.S. yields, which have reached levels not seen in nearly two decades. As a result, demand for these bonds has outpaced supply, with investors showing strong interest despite the reluctance of firms and banks to lock in high borrowing costs over extended periods. The shift is reshaping the corporate bond market, particularly affecting pension funds and insurers that rely on long-term debt instruments. Investment-grade note sales have dropped significantly compared to last year, while shorter-maturity bonds now dominate issuance activity. This trend poses challenges for companies like Alphabet Inc. and Amazon.com Inc., which previously used long-dated bonds to fund AI infrastructure.
Topics: corporate bonds interest rates issuance trends long-dated debt