Bond Issuance Booming

With the Federal Reserve recently increasing interest rates, you would expect that the amount of corporate bonds issuance would slow. However, at least in the first week of January, this was not the with the largest volume of bonds issued in history. Although the recent interest rate increases would seem to be a negative, it is believed that the Fed will further increase interest rates in 2017, making future bond issues even more expensive. And, while the average yield to maturity may have increased, the current 3.7 percent is still below the average over the past 10 years. Additionally, with the expected number of mergers and acquisitions expected for 2017, companies may be stockpiling cash in advance of these announcements.