Following the typical seasonal lull in August, the beginning of September is usually very active as the window to the new issue market reopens and issuers look to tap the capital markets for their funding needs. However, not only was new issue activity strong last week, volumes were off the charts. According to Bloomberg, $74 billion worth of new investment-grade bonds were sold last week, setting a record for the amount of issuance sold in a week. Comparatively, last week’s volume is almost the same amount as that sold during August.
Even in the face of the record-breaking volumes of new corporate debt being brought to market, corporate credit spreads held steady, and in many cases tightened slightly. In the investment grade market, on a week-over-week basis, the Morningstar Corporate Bond Index tightened 1 basis point to 123 and in the high-yield market, the ICE BofAML High-Yield Master II Index tightened 4 basis points to +405.