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A bumper year for corporate debt: Global corporate debt issuances hit an all-time high of USD 7.93 tn this year, growing more than 33% y-o-y, the Financial Times reports, citing LSEG data. Companies jumped to tap debt markets amid increased investor appetite, which boosted supply and lowered corporate borrowing costs compared to government debt.
Tight credit spreads are making corporate debts attractive. Spreads on 10-year investment grade corporate bonds tightened to their lowest level since 2005 last Thursday, falling to 86 basis points above US treasuries from 116 bps by the end of 2023, according to S&P data cited by the Wall Street Journal.
Big companies saw the opportunity: Many corporates raced to the debt market this year to capitalize on the favorable spreads, with investment grade companies issuing a total of USD 1.66 tn in debt until 10 December, according to data from Dealogic. Among the issuers was Facebook parent Meta, which sold USD 10.5 bn of investment grade bonds in August, marking its largest-ever issuance.
Companies aimed to secure their borrowing needs early this year, anticipating market turbulence around the US elections in November. Donald Trump’s re-election further lowered spreads, as markets anticipated tax cuts that would boost corporate earnings. This prompted companies to lock in favorable rates by borrowing for the next year as well.
The trend is expected to continue in 2025: Borrowing activity “will remain steady” into next year as companies move to refinance their low-cost debts, Marc Baigneres, global co-head of investment-grade finance at JPMorgan, told the FT. Financing acquisitions and capital investments will also fuel corporate issuances next year, amid an expected easing of both M&A regulation and monetary policy under Trump, advisors told WSJ.
MARKETS THIS MORNING-
Asian markets are in the red this morning, following the sell-off on Wall Street. Japan’s Nikkei fell 1.0% in early trading, and Shanghai Composite fell 0.1%. Meanwhile, Wall Street futures are inching up in overnight trading.
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ADX |
9,416 |
+1.0% (YTD: -1.7%) |
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DFM |
5,153 |
+0.5% (YTD: 26.9%) |
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Nasdaq Dubai UAE20 |
4,196 |
+0.5% (YTD: +9.2%) |
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USD : AED CBUAE |
Buy 3.67 |
Sell 3.67 |
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EIBOR |
4.2% o/n |
4.5% 1 yr |
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TASI |
12,001 |
+0.9% (YTD: +0.3%) |
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EGX30 |
29,325 |
-0.9% (YTD: +18.8%) |
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S&P 500 |
5,907 |
-1.1% (YTD: +23.8%) |
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FTSE 100 |
8,121 |
-0.4% (YTD: +5.0%) |
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Euro Stoxx 50 |
4,869 |
-0.6% (YTD: +7.7%) |
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Brent crude |
USD 74.39 |
+0.3% |
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Natural gas (Nymex) |
USD 3.89 |
-1.1% |
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Gold |
USD 2,621.2 |
+0.1% |
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BTC |
USD 92,382 |
-1.1% (YTD: +117%) |
THE CLOSING BELL-
The DFM rose 0.5% yesterday on turnover of AED 486.5 mn. The index is up 26.9% YTD.
In the green: Dubai National Ins. & Reins. (+14.8%), Emaar Development (+3.0%) and Ithmaar Holding (+2.0%).
In the red: Agility (-9.7%), Shuaa (-4.1%) and Watania International Holding (-4.0%).
Over on the ADX, the index rose 1% on turnover of AED 957.3 mn. Meanwhile, Nasdaq Dubai closed up 0.5%.
CORPORATE ACTIONS-
Al Sagr National Ins. is set to proceed with its capital reduction, including seeking official approvals from the relevant authorities, after it received board approval, according to a disclosure (pdf). The company approved a capital reduction by AED 80 mn in November, resulting in a post-reduction capital of AED 150 mn to offset losses during the month.
