Early-Year Corporate Bond Issuance Rush... Targeting Before Trump Inauguration

122 Trillion Won Issued Since the Start of the Year
Largest Amount Since 1990

As the inauguration of Donald Trump, the President-elect of the United States, approaches, it has been revealed that companies have been issuing a large number of bonds since the beginning of the year.

According to data from market information provider LSEG, the amount of dollar-denominated investment-grade and high-yield bonds issued by companies through January 8 this year is $83.4 billion (approximately 122 trillion won). This is the highest figure since 1990.

It is analyzed that companies are taking advantage of the demand to increase bond investments ahead of the market volatility triggered by Trump’s return. Mark Baignas, Global Co-Head of Investment Grade Finance at JP Morgan, said, “The market is strong, so there is no need to delay. Companies are trying to issue as soon as possible.”

The spread (the difference between government bond yields and corporate bond yields), which showed the lowest level in decades, is also cited as one of the reasons behind this trend. According to ICE BofA, the investment-grade U.S. corporate bond spread was 0.83 percentage points as of the 8th, slightly above the lowest level since the late 1990s.

January is a busy period for banks among companies in terms of bond issuance. However, the bond issuance rush this year is viewed by the industry as a move by companies to secure cheaper bond issuance before Trump’s inauguration.

Meanwhile, amid concerns that Trump’s tariff policies could reignite inflation, the Federal Reserve (Fed) has indicated it will slow the pace of interest rate cuts this year. According to Wells Fargo, the amount of high-grade dollar-denominated bonds maturing this year reaches $850 billion, and next year it will exceed $1 trillion, increasing the pressure on companies to refinance.

Some voices have also raised warnings about overheating in the bond market. On the 6th, Lisa Cook, a Federal Reserve Board member, said, “The risk premiums on stocks and corporate bonds are near the lower end of their historical probability distribution,” adding, “This means the market has priced in very optimistic assumptions and therefore may be vulnerable to significant declines due to bad news or changes in investor sentiment.”