In an interview, she said: "The market is preparing for a phase of supply indigestion similar to what occurred earlier this summer in the investment-grade bond market. Now, the same situation is emerging in the high-yield bond market."
A string of large junk bond issuances, including a $10 billion deal by SoftBank Group, has pushed September's high-yield bond issuance volume to $38.51 billion, making this month the busiest for high-yield bond issuance so far this year. Meanwhile, Paramount Skydance Corp is seeking to raise $44.4 billion this week through both investment-grade and high-yield bonds.
Lynam noted that this wave of bond issuance, coupled with expectations of a significant number of additional deals later this year and rising bond yields, is putting pressure on corporate bond spreads. Bloomberg index data shows that, as of last Friday's (25th) close, the additional yield investors demand for holding corporate junk bonds over U.S. Treasuries widened by 12 basis points to 294 basis points, the highest since April.
Lynam also stated that Goldman Sachs data indicates that financing supply related to AI projects in the bond market so far this year has approached $600 billion, an extraordinary figure. (rc)