Over $70 billions amassed in a single day, reaching a new high since June! Global companies rush to issue bonds ahead of the Federal Reserve rate hike

According to Jinse Finance APP, after setting the busiest global issuance day since June and raising over $70 billion on Tuesday, companies are rapidly returning to the bond market to accelerate financing, aiming to secure funds before borrowing costs climb further.

According to sources, at least five Asian companies—including Japan Post Insurance Co. and Vedanta Resources Ltd.—are seeking to price US dollar bonds on Wednesday. Meanwhile, Amazon (AMZN.US) has officially launched its first pound-denominated bond issuance, as major tech giants continue to turn to the bond market to raise capital for their investments in the artificial intelligence (AI) sector.

Rising tensions between the US and Iran have intensified inflationary pressures, prompting investors to gauge whether the Federal Reserve will raise interest rates later this month, giving companies plenty of reasons to flock to the bond market in advance. Compiled data shows that issuers who priced new bonds on Tuesday still attracted strong demand, despite minimal spread premiums over outstanding bonds.

"The market has fully digested the new bond supply, corporate fundamentals remain solid, and the main risks in the current global credit market are geopolitical issues and inflation," said Mark Reade, Head of Asia Credit Strategy at Mizuho Securities.

However, the escalation of Middle East tensions and rising oil prices have somewhat dampened the early-week market enthusiasm. On the first trading day for the US investment-grade market after the Labor Day holiday, issuance volumes hit the lowest level in three years.

Another potential market mover is the next round of 10- to 20-year outstanding US Treasury buyback volume announcement, scheduled by the US Treasury for Wednesday local time. This announcement is particularly significant—last month, US Treasury Secretary Janet Yellen stated that, in order to curb rising long-term borrowing costs, the buyback size would "at least double."

Data shows that investor demand in the US investment-grade market on Tuesday was about four times the actual bond issuance volume.

"This week's deals have seen spreads remain stable and order books unexpectedly large," said Owen Gallimore, Head of Asia Pacific Credit Analysis at Deutsche Bank. "Given the volatility in oil prices and the Treasury market, the credit market has shown impressive resilience."