According to senior analyst Jacob Habibi new bond issuance in the US investment grade market has ‘exploded’ this year as companies have increasingly looked to finance acquisitions.
There are no signs of this trend slowing down through the end of this year and this has consistently weighed on US IG credit spreads as investors sell holdings to make room for new issues.
Now though, US IG market is enforcing some discipline on issuers by demanding higher yields and wider spreads in order to get new bond deals done, which means valuations in the US IG market are becoming quite attractive relative to other fixed income asset classes, Habibi explained, which may prompt a pickup in demand over the medium term.
