Goldman Sachs Says Surge in US Junk-Bond Supply Is Pressuring Investor Demand
Summary
- Issuance of US high-yield corporate bonds has surged, with investor demand struggling to keep pace with supply.
- Junk-bond spreads and CCC-rated bond spreads rose to their highest levels since April and since 2023, respectively.
- Goldman Sachs estimated this year's supply of AI-related bonds at about $600 billion and said issuance could accelerate again in 2027.
Forecast Trend Report by Period
Issuance of US high-yield corporate bonds has surged, adding pressure on investor demand as supply outpaces buyers' capacity to absorb it. Junk-bond spreads have widened to their highest level since April.
Walter Bloomberg reported on September 28 that US high-yield corporate bond issuance reached $38.5 billion in September.
Spreads on lower-rated CCC bonds climbed to their highest level since 2023. The increase indicates that growing corporate bond supply is straining investors' ability to absorb new debt.
Goldman Sachs estimated this year's supply of artificial intelligence-related bonds at about $600 billion. It also projected that AI-linked bond issuance could accelerate again in 2027.
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