Following the recent surge in US bond market issuance, the exceptionally busy start to the year reflects improved rate visibility, strong demand for carry and issuers’ desire to front-load supply while funding windows remain open.
The exceptionally busy start to the year in US bond markets (which has seen companies borrowing in the US bond market at the fastest pace since the pandemic) reflects a familiar combination of improved rate visibility, strong demand for carry and issuers’ preference to front-load supply while funding windows appear open.
Seasonality matters: January has historically offered the deepest liquidity and most reliable execution, encouraging borrowers to pre-empt potential volatility later in the year. While issuance should moderate from these early peaks, ongoing refinancing needs and balance-sheet optimisation suggest supply will remain structurally elevated.
In the UK and Europe, similar dynamics are likely, albeit with greater sensitivity to policy divergence and local liquidity conditions. In particular, Investment-grade issuers may look to accelerate funding ahead of central bank inflection points, while banks and sovereign-adjacent borrowers remain attentive to market depth and spread stability. Ultimately, the focus will shift from headline volumes to how effectively markets absorb supply as rates, spreads and liquidity interact.
By Fraser Lundie, Global Head of Fixed Income at Aviva Investors.
