By Yoruk Bahceli

(Reuters] – In January, companies raised a record $500,000 in debt as they sought to capitalize on favorable funding conditions.

According to Refinitiv data, $532 billion was raised globally by investment-grade firms in January. This is more than the $530 billion record set last year.

The United States is the largest source of issuance. Companies and financial institutions issued bonds worth $153.5 billion each, according to data. This was the highest level since 2017.

Winnie Cisar is global head for strategy at CreditSights. “The primary driver of this phenomenon are borrowing costs which are very low,” she said.

“Firmiers are trying to stay ahead of what the next leg in yields will be, with the Fed talking about tightening. Rate markets moving higher.

This is an indication of confidence in the credit market, after they suffered their largest monthly loss since March 2020.

At the beginning of January, U.S. Federal Reserve indicated that it might tighten monetary policies earlier than anticipated. This could include shrinking its $8 trillion balance sheet.

The global meltdown in risk assets and bond markets has led to a sharp rise in bond yields. Traders have priced in five Fed rate increases for the rest of 2022.

U.S. banks, financial institutions led the way in issuing $104 billion worth of securities in January.

Cisar from CreditSights indicated that although we expected to see an improvement in financials’ ability to borrow less than last year, many of the issues in question are some of the most knowledgeable in the market when it comes to navigating borrowing terms.

BofA indexes show that despite a 40% yield increase on U.S. investment grade corporate bonds, companies are still able to issue cheap debt, which will allow them to reduce their funding costs.

Refinitiv Datastream suggests that borrowing costs could rise by another 80 basis point for companies participating in BofA’s U.S. Investment-Grade Corporate Index before surpassing the coupons they are paying.

Sub investment-grade firms, on the other hand, saw their bond issuance nearly halve compared with last January’s record at $32 Billion.