US investment-grade debt issuance tops $1 trillion on back of Fed purchases

• US investment-grade bond issuance topped $1 trillion on Tuesday as the corporate-credit market rebounds from March lows.
• High-grade issuance on Tuesday reached $11.2 billion across 11 deals, Bank of America strategists said in a note.
• Year-to-date bond offerings trounce last year's pace, as companies issued roughly $1.14 trillion in investment-grade debt throughout 2019, according to the Securities Industry and Financial Markets Association.
• The issuance frenzy comes after the Federal Reserve's historic move into corporate-debt purchases drove investors back into risk markets.
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US investment-grade companies have issued more than $1 trillion in debt in the year-to-date, offering bonds at a voracious pace as the coronavirus pandemic lifts cash demand.

High-grade issuance on Tuesday reached $11.2 billion across 11 deals, Bank of America strategists said in a note. The single-day sum brings the year's total to $1.003 trillion. Nearly $200 billion in debt has been issued in May so far as companies capitalize on growing risk-on attitudes.

The bond frenzy is far more intense than in the year-ago period. Investment-grade firms offered $1.14 trillion in investment grade debt through all of 2019, according to the Securities Industry and Financial Markets Association.

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The corporate bond market has enjoyed a sharp recovery from initial coronavirus-fueled lows following unprecedented Federal Reserve intervention. The central bank announced on March 23 it would issue debt to large companies through direct bond purchases and by taking in corporate-credit exchange-traded funds. The announcement buoyed the tumbling sector and the stock market through April and into May.

The monetary policy announcement also boosted inflows to investment-grade bond funds and ETFs over recent weeks. March saw record amounts of cash pulled from the credit market as investors flocked to US Treasuries.

The Fed's ETF purchases began on May 12. The monetary authority's program for direct bond purchases should be operational by June, chair Jerome Powell said during Tuesday Senate testimony.

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