(Bloomberg) -- Corporate bond sales worldwide climbed to the most since May this week, following an offering by SoftBank Group Corp. in Japan and the first issuance of euro-denominated debt with negative yields.
Multi-part sales by Sony Corp. in Japan and Germany’s Siemens AG and Home Depot Inc. in the U.S. put deals by non-financial companies within reach of the year’s weekly record of $78 billion, according to data compiled by Bloomberg. In one of Friday’s biggest deals, Sony issued 200 billion yen ($1.95 billiin) in debentures.
Global companies are borrowing at near record lows, and issuance in September has picked up in advance of closely watched meetings by the Federal Reserve and the Bank of Japan on Sept. 21. In the U.S., blue-chip companies sold more than $52 billion of bonds, making it one of the busiest weeks on record.
“It’s a very accommodative environment for companies to issue,” said David Brown, head of global investment-grade credit at Neuberger Berman. “There remains a continued amount of strong demand from overseas buying. I would expect this issuance to be absorbed fairly well.”
While traders are pricing in only a 36 percent probability of a rate hike by the Fed this month, the perception that such a move is nearing means firms are likely taking advantage of low borrowing costs while they can, said Toshiyasu Ohashi, the chief credit analyst at Daiwa Securities Group Inc. in Tokyo.
“Companies are moving to lock in low-cost dollar funds,” said Ohashi. “In Japan, the low cost of funding for companies is likely to continue for quite a while longer, and we are starting to see companies coming more to the market.”
In Europe, sales climbed to more than 15 billion euros ($17 billion), a record for the trading week after the U.S. Labor Day holiday, the unofficial end of the summer break.
French drugmaker Sanofi and German household products maker Henkel AG became the first companies outside of the banking industry to be paid to borrow in euros and German auto components maker Schaeffler AG sold the biggest-ever payment-in-kind toggle notes.
The average yield on investment-grade euro bonds fell to a record 0.6 percent on Wednesday, while that on junk notes in the single currency reached 3.76 percent on Thursday, the lowest in a year, according to Bloomberg Barclays index data.
U.S. investment-grade bond sales surpassed $1 trillion, setting a pace that would see 2016 issuance exceed the record $1.32 trillion of notes sold in 2015.
“Conditions are as good as they have been for a very long time,” said Eden Riche, the London-based head of high yield and emerging markets syndicate at ING Bank NV. “We have been banging that drum for months, saying if you have even thought about building a war-chest don’t wait too long. Maybe they have finally started to get the message.”
In the U.S., companies are already lining up to sell more debt. Drugmaker Shire Plc plans to sell bonds in as many as five parts to repay a $12.4 billion loan it used to help fund its takeover of Baxalta Inc. Among high-yield issuers, medical technology company Acelity LP and seafood restaurant chain Landry’s Inc. are marketing notes, according to people familiar with the matter who asked not to be named because the deals are private.
The expansion of negative yields from Europe to Japan this year has also increased demand for U.S. dollar corporate bonds and helped lower borrowing costs for companies, according to Bank of America Corp. The spread on dollar company securities fell to as low as 138 basis points last month from as high as 221 in February, a Bank of America Merrill Lynch index shows.
BOJ Governor Haruhiko Kuroda said in August that the negative-rate policy is helping boost issuance of longer-dated bonds by Japanese companies.