Deal slump hits US high-grade bond supply, pressures spreads

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NEW YORK: The pipeline for the US Advanced Corporate Bond for Fund integration has reached the lowest level in five years when President Donald Trump has a trade war agreement, which may be an honor for lenders but a challenge for banks and investors.

Wall Street expected that the Trump administration’s policies such as dergulation and tax deductions would boost rehabilitation in contract activity, and this year would be increased to $ 250 billion to $ 300 billion to $ 300 billion, which is more than $ 179 billion in 2024.

Instead, the economic uncertainty due to Trump’s policies, especially the risk of tariffs on US imports, has put the markets in turmoil, and forced executives to “pause” on deals while they are looking forward to explanation. Delivery data shows that the US M&A volume fell 3.0 percent in the first quarter.

Meghan Gripper, the head of the Barclays Capital Markets, said that the financing of only $ 8 billion is currently in the pipeline for the market, compared to about $ 100 billion last year, which is the lowest since June 2020. Overall, the number of investment grade bond issuance is an average of $ 1.65 trillion in 2025.

RBC Capital Markets Global Head of Debit Capital Markets, Daniel Botov, said he was expected to contain M&A financing in the 20 % volume released this year. “But this is expected,” he said.

Some bankers and analysts said low issuance for deals could put severe pressure on the spread of credit, which issues premiums on the treasury that pay for investors. If M&A malfunction is underway, experts say it can also kill the lower banks’ lower lines, which could potentially reduce the industry job.

A BMO Capital Strategy, Daniel Criter, said he now expects the overall investment level for the year to be close to $ 1.5 trillion, as well as the second year to release, like 2024.

But the volume of this launch cannot be enough to satisfy the investors who are expected to flush in cash. Interest payments and bonds will be matched, investors will get about $ 1 trillion this year this year – which is extraordinarily high. According to JP Morgan Research Notes and analyst’s estimates, most of the amount will be re -invested.

This year, it will be at the top of the demand for unstable investors to be locked in high production on advanced bonds before the expected cuts in US interest rates. According to Ice BAML data, the credit spread has tightened approximately 66 points after touching their wide level for the year in March. But at 91 twenty points, they are just 14 twenty points from their lower levels over a decade.

Without the release of bonds to fund M&A activity, the spread can live on these severe levels or even more tight if the economy slows down and the risk of these bonds increases. “Reducing growth as a result of Trump’s trade and revenue policies is almost certain, but the possibility of recession is not shown,” said Edward Marinon, Macro Credit Strategic Edward Marinon, SMBC Nico Securities.

“We do not expect the credit outbreak to transmit materially from the current levels – unless our view of recession changes,” said Marinin. Commodown has been dramatic in expectations of issuance. At one of the first quarter, it seemed as if they were on the right path with some big deals.

For example, in March, about $ 49 billion was deposited by investment grade companies, including Kandy Giant Mars, a $ 26 billion bond offering, which has a $ 36 billion seizure of the Prangles maker Clanova, which has a largest maximum of six billion-year-olds. Support.

But Barclays’ Gripper said the trend is not intact and the pipeline is dry. Sandeep Desai, co -head of loan markets for North America at the Deutsche Bank, said the volatility “is” reluctant to pay for the uncertain macro -macro -macro -macroesy environment with the salesman, “said Sandeep Desai.

With a breakthrough between announcement and financial support, the absence of an existing pipeline is not good for the year for years.

“The new M&A will need financial support in the next few months,” said Victor Fort, head of the Grade Capital Markets and Syndicate in Mizoho. “But this progress has been delayed due to economic uncertainty.”