Volatility concerns and expiring tax cuts drive surge in debt issuance
- U.S. companies are rushing to secure new financing ahead of the Biden-Trump election
- Investment-grade companies have issued about $702 billion in bonds so far this year
- Concerns about volatility coming into the election are driving the deluge of debt issuance
- The stakes are high as aspects of the 2017 tax cuts are set to expire
- Companies are front-loading their borrowing needs for the year
- Wide-open capital markets and yield-hungry bond buyers are driving the borrowing boom
- Investors are earning less extra compensation on corporate bonds as buyers flood into new issuance
- Gross issuance of investment-grade corporate bonds is expected to reach about $1.3 trillion for the full year
U.S. companies are racing to secure new financing ahead of the likely White House rematch between President Joe Biden and former President Donald Trump. Investment-grade companies have already issued $702 billion in bonds this year, the highest figure in the past five years. The deluge of debt issuance is driven by concerns about volatility coming into the election and the potential impact of proposed tariffs and tax increases on U.S. corporations. Aspects of the 2017 tax cuts are set to expire, and extending them would cost an estimated $4.6 trillion through 2035. Companies are front-loading their borrowing needs for the year, taking advantage of wide-open capital markets and yield-hungry bond buyers. However, investors are earning less extra compensation on corporate bonds as buyers flood into new issuance. Gross issuance of investment-grade corporate bonds is expected to reach $1.3 trillion for the full year.
Factuality Level: 3
Factuality Justification: The article contains a mix of relevant and irrelevant information, including details about corporate bond issuances, the potential impact of the upcoming U.S. election on financing, and opinions from various experts. However, there are some tangential details and unnecessary background information that do not directly contribute to the main topic. The article also lacks depth in analysis and could benefit from more context and explanation.
Noise Level: 3
Noise Justification: The article provides a detailed analysis of the current situation in the U.S. corporate bond market ahead of the upcoming election. It discusses the potential impact of the election on corporate financing, the expiration of tax cuts, and the Federal Reserve’s actions. The article includes quotes from industry experts and data to support its claims, making it informative and relevant to investors and those interested in economic trends.
Financial Relevance: Yes
Financial Markets Impacted: The article discusses U.S. companies racing to secure new financing ahead of the upcoming U.S. presidential election. It mentions the costs of extending the Trump-era tax-code overhaul and the potential disruptive effects of proposed tariffs and tax changes on U.S. corporations.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Rating Justification: The article focuses on the financial implications of the upcoming U.S. presidential election and the potential impact on U.S. companies. While there is no mention of an extreme event, the discussion of tax changes and proposed tariffs highlights the potential economic consequences of the election outcome.
Public Companies: UBS (UBS), Nuveen (Not available)
Private Companies: Insight Investment
Key People: Leslie Falconio (Head of taxable fixed-income strategy for the chief investment office of UBS Wealth Management), Brendan Murphy (Head of fixed income in North America at Insight Investment), Richard Cheng (Head of investment-grade credit at Nuveen)
Reported publicly:
www.marketwatch.com 
