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Worrisome Change in the Corporate Debt Market

Irregularity of flow of new corporate bond issues concerns Citi analysts.

By Tracy Alloway, Bloomberg | Updated on February 29, 2016

Welcome to the 2016 corporate bond market. It’s a lot like the 2015 corporate bond market—except in one crucial way.

So far this year, sales of new investment-grade bonds are running at about US$200 billion, according to figures from Citigroup Inc.—or some 14 percent ahead of sales for the same period in 2015, which proved to be a record year in terms of bond issuance. The $200 billion figure conceals two things, however. One is the outsized influence of a supersized debt deal to fund Anheuser-Busch InBev NV’s takeover of SABMiller Plc. Strip the beer bonds out, and issuance for the period is 12 percent lower year on year. The second is the increasingly stop-start nature of the primary market in which companies sell new debt to investors.

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