NEW YORK (Reuters) – Corporate America appears to be rushing to get the most out of the decade-long bull market in stocks and bonds before a possible recession and election-year stock market volatility slam the IPO and credit windows shut.
FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., August 12, 2019. REUTERS/Eduardo Munoz/File Photo
Approximately 70 companies have registered with the U.S. Securities and Exchange Commission to go public, according to estimates from Renaissance Capital, while $72 billion in investment-grade corporate debt – a figure nearly as large as the total issuance in August – was issued last week, according to data from Dealogic.
The rash of new deals comes as the U.S.-China trade war weighs on the global economy, helping push 30-year Treasury yields to record lows and increasing fears of a global economic slowdown. U.S. manufacturing activity contracted for the first time in three years in August, while construction spending barely rose in July, helping send business confidence lower, according to the Institute for Supply Management.
As a result, even companies like Apple Inc (AAPL.O) and Walt Disney Co (DIS.N) that have billions of cash on hand are taking on new corporate debt, taking advantage of the opportunity to lock in historically low borrowing costs while investor demand for yield remains high.
“Companies might as well take advantage while they can. Corporations are getting in while the credit window remains wide open as you just never know when it slams shut,” said Greg Peters, head of multisector and strategy