Global debt in a race against rising interest rates – Noelle Micallef
Global corporate bond issuance reached record pace in the first week of the year. As at January 7, global companies raised more than $100 billion worth of bonds, as financiers worked in an effort to lock in the low borrowing costs before the expected rise in benchmark interest rates. While the early-January rush is traditional, this amount of new deals may by an early indicator of the issuances expected early this year. Banks and other financial issuers dominated the deals, with a number of foreign institutions raising funds in the US markets. New bonds have been issued by blue-chip names such as MetLife (life insurance company) and Caterpillar, as well as pandemic-hit companies such as cruise operator Royal Caribbean. Having said this, there are indications that investors may have pulled back on some orders for new bonds after the minutes from the Federal Reserve’s (‘Fed’) December meeting were issued last week. In one of my articles back in October 2021, it was indicated that central bankers insisted that the surging inflation was purely transitory or temporary. However, the December meetings held by the Fed, the European Central Bank (ECB) and the Bank of England (BoE)...