Holidays on hold as bond market defies usual August slowdown

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Amazon.com and British American Tobacco were driving the second-busiest August for corporate bond issuance in a decade, and it’s only a little more than halfway through.

August doldrums they ain’t.

Beaches are far from the minds of many company treasurers this summer as they focus instead on crowding into bond markets, as rising Fed rates and explosive White House politics inject refinancing plans with a sense of urgency.

With those risks looming in the background, Amazon.com and British American Tobacco were driving the second-busiest August for corporate bond issuance in a decade, and it’s only a little more than halfway through.  

High-grade dollar issuance is on pace to eclipse last year’s record, at $984 billion as of Aug. 15, according to Bloomberg Intelligence, supported by merger-and-acquisition loans being refinanced in the bond market. Amazon’s blockbuster issue will replace $13.7 billion of short-term bank debt to buy Whole Foods Market.

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For treasurers eyeing yields already climbing from multiyear lows as tensions between the U.S. and North Korea escalated this month, there may have been no time like the present.

Bank advisers on the hook for billions of dollars of bridge loans may have been equally keen to lock up refinancings before demand dried up.

Amazon and BAT, seeking a total $37.5 billion for acquisition financing, drew orders for $83 billion.

Europeans refrained from the sales spree, with BAT the only high-grade nonfinancial company to take advantage of borrowing costs near a record low.

In Asia, bond bankers were kept busy with record August volumes amid a resurgence for transactions out of China.

Jason Wang, China head of debt capital markets at UBS Group in Hong Kong, cited the nation’s nonchalance when it comes to taking time off.

“Chinese companies are comparatively less sensitive to summer holidays than their peers in terms of issuing window and their targeting investors are probably on the same page,” he said.

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