Was that the high water mark for bond market madness?

The GlobalCapital Podcast

Jan 14 2022 • 32 mins

The primary bond market was going gangbusters this week. January is always a busy month but, so far, this one feels busier than others.

Bond markets have run on central bank fuel in the form of low rates and quantitative easing for years. That has led to some startlingly low yields and an era of cheap borrowing. But with rate rises on the way to combat inflation, there is a very real sense that this could be the end of an era.

Amid the flood of new bond issues, issuers are grappling with how to keep lure investors into allowing them to lock in low rates just as the era of cheap money looks set to end. Meanwhile, investors are asking themselves what it would take for them to buy certain bonds that pay what are obviously meagre yields now, let alone how they will compare once rates rise across the board.

All of that has led to some interesting dynamics across the sovereign, supranational and agency, financial institution, corporate high yield and convertible bond markets. The success of some of the deals issued this week looks, at first glance, to be completely counterintuitive, that is until you take a closer look.

On this week’s podcast, we take that closer look to see what is driving bond issuance, whether we witnessing the final throes of the age of cheap money, and how that might affect the rest of the year in the primary capital markets