Big companies raise record sums from bond market in panicked rush for cash

The world’s highest-rated companies, including Warren Buffett’s Berkshire Hathaway, Disney and the drugmaker Pfizer, have bolstered their ability to weather the economic downturn, swallowing higher borrowing costs to raise hundreds of billions of dollars of debt while lower-rated issuers struggle.  Global corporate bond issuance by “investment grade” companies has surged to $244bn so far in March, the highest monthly total since a record $252bn was sold in September, according to Dealogic.

The US has led the charge with a record $150bn of new bonds sold, and $28bn has been raised in Europe. Adding in a raft of new bank bond sales from the likes of Wells Fargo and Goldman Sachs takes the global tally to $408bn this month, separate data from Refinitiv showed.  Issuance was particularly prolific last week, after central banks and governments around the world announced further supportive measures for financial markets, including the Fed taking the unprecedented step of announcing that it would begin to buy corporate bonds.

The coronavirus outbreak has prompted a general dash for cash from companies around the globe, with groups drawing down emergency credit lines alongside the spate of debt issuance. Corporate treasurers are trying to shore up balance sheets so they can outlast any drag on revenues from the economic slowdown.

“People want to build a cushion for economic uncertainty,” said Andrew Karp, who runs Bank of America’s global investment grade capital markets business, who noted that previous weeks had seen a virtual drying-up of issuance, as alarm over the virus spread. “When you get the opportunity to access the market, people will jump through that window.” The past week’s US corporate issuance also made records, topping $73bn, according to the Dealogic data. The sum is extraordinary because unlike previous weeks of hefty issuance, it has not included financing for a big acquisition, said bankers.