Corporate debt issuance is at a four-year high, Moody's Investors Service and Dealogic report.
According to the ratings firm and the research company, corporate borrowers are issuing the highest proportion of debt - used for share buybacks or expansion projects - since at least 2006. The reason for their exuberance may be twofold: First, corporate America appears confident that the economy will continue growing (albeit slowly); second, borrowing costs are extremely low.
Investment-grade corporate bond yields are at their lowest level in seven years, Bloomberg reported August 9, citing Bank of America Merrill Lynch data.
Fortunately for corporations, investors appear interested in their bond issues. Greenwich Associates, a research firm and consultancy, says hedge funds represent 26 percent of the trading activity in the corporate-bond and credit-derivative markets. Last year, they made up just 16 percent of the volume in the markets for corporate bonds and credit derivatives.
"Hedge funds are quickly regaining some of the clout they lost in U.S. fixed-income markets during the market meltdown," Greenwich Associates said in a survey it published August 11.
