Companies around the world are scrambling to pour into the debt market to take advantage of lower borrowing cost opportunities in order to issue debt while the market remains stable.

A record number of blue-chip companies poured into the US corporate bond market on Tuesday. According to the compiled data,$Ford Motor (F.US)$Its financial services company Ford Motor Credit Co. ,$Target (TGT.US)$und$Barclays (BCS.US)$With 29 companies using the bond market for financing, based on the number of issuers, this is the busiest issuance day in the history of the corporate bond market. Bank debt underwriting professionals expect companies to issue about $125 billion in September through high-rated US bonds.

According to information, the corporate bond market is usually very busy the day after Labor Day in the US. A year ago today, the market also ushered in the busiest trading day of last year. On that day, 20 companies issued bonds totaling $36.2 billion.

In US dollars, the amount of high-rated bonds issued on Tuesday ranked the third highest in history, with a total issuance amount of 43.3 billion US dollars, after September 11, 2013.$Verizon (VZ.US)$49 billion US dollars of bonds were issued, making it the largest corporate bond issue in history, bringing the total amount issued on the same day to 51.9 billion US dollars; January 13, 2016$Anheuser-Busch Inbev (BUD.US)$Bonds of 46 billion US dollars were issued to fund the acquisition of SABMiller Plc, bringing the total amount issued on the same day to about 48.75 billion US dollars.

Matt Brill, head of investment-grade credit at Invesco North America, said, “Summer is officially over, and companies are looking to take advantage of the opening of the market to borrow money. Traditionally, we've seen a rebound in distribution after Labor Day, but this year has been busier than we expected.”

Speculative companies have also joined the ranks, trading more than $17 billion through the high-yield bond and leveraged loan markets, far exceeding last year's post-Labor Day level.

Lenders who have always been particularly eager to provide debt for new acquisitions and leveraged acquisitions are finally seeing supply enter the market. F1 Group initiated a $0.85 billion leveraged loan sale to help its owner Liberty Media Corp. acquire the MotoGP World Championship. A leveraged loan totaling $2.05 billion was also launched during the cycle to fund educational software companies$Instructure Holdings (INST.US)$The acquisition.

Many companies are also seeking refinancing and dividends from investors.$TransDigm (TDG.US)$A new $3 billion bond will be issued to provide shareholders with a special cash dividend of up to $4.5 billion.

Meanwhile, in the European market, 24 companies and government-linked issuers raised 22.6 billion euros from the bond market, following the issuance of more than 11.5 billion euros on Monday. In the Asian market, the Indonesian government has entered the market.

The surge in issuance indicates that corporate treasurers want to lock in debt when risk premiums are low. By the close of Tuesday, the average yield on global investment-grade corporate bonds was 4.52%, close to its lowest level in about two years.

Robert Tipp, chief investment strategist and head of global bonds at PGIM's fixed income company, said in a telephone interview: “For issuers looking to issue low-interest bonds, you can clearly see why they are entering the market at this time.”

The performance of the bond market is in stark contrast to the stock market. On Tuesday, US stocks fell into their worst day since the market crashed early last month due to growing concerns about corporate profitability.

At first glance, this wave of bond issuance seems a bit counterintuitive, because the market generally expects the Federal Reserve to start cutting interest rates this month, and lower borrowing costs are beneficial to corporate issuers.

However, if the Federal Reserve does not cut interest rates fast enough, or if the US election stimulates market fluctuations, yields may be pushed in an unexpected direction. This makes finance managers who need to borrow this year or even next year have to borrow before October.

This wave of bond issuance has even spread to Latin America, marking the region's busiest day for hard currency bond issuance this year. The Uruguayan government, BBVA Mexico SA, Banco de Credit to Del Peru, and Petrobras (Petrobras) all issued dollar bonds on Tuesday.

Bill Zox, portfolio manager at Brandywine Global Investment Management, said, “Just like a day after dark, the huge global demand for corporate bonds will spur supply.”

edit/ping