Despite rising interest rates, the issuance of investment-grade U.S. corporate bonds remains robust, according to Fitch Ratings.
The rating agency reported that the market for investment-grade corporate bonds hit US$4.9 trillion as of the end of April, with US$222 billion in new issuance through the first four months of the year.
While new issuance is down 14% year over year, Fitch said the new issue market is “holding up relatively well, despite rising interest rates, high inflation and plausible stagflation.”
At the same time, high-yield issuance has dropped sharply.
Fitch reported that issuance of high-yield debt is down 75% from last year. Companies moving up to investment grade from high yield also contributed to the stock of investment-grade debt, the agency said, adding US$72.1 billion since the start of the year.
Looking ahead, Fitch expects to see continued new issue activity in the short to medium term, given that there is US$156 billion in investment-grade bonds maturing this year, followed by US$272 billion in 2023 and US$302 billion in 2024.