MW Companies are issuing the least amount of 30-year bonds in 14 years. What that tells investors.

By Joy Wiltermuth

U.S. companies are throwing the dice on lower interest rates and less policy uncertainty

Chronically online people aren't they only ones finding it tough to focus on the future.

Higher interest rates and a rapidly changing policy landscape under President Trump's second term have left many big U.S. corporations unwilling to make longer-term financing commitments in the bond market.

Investors may want to lock in today's 5% bond yields - some of the highest since the 2007-08 global financial crisis - for many years to come. But major corporations haven't obliged.

"There's been a lot more issuance 10 years and in," said Kyle Stegemeyer, head of investment-grade debt capital markets and syndicate at U.S. Bancorp. Their focus, he noted, has been on refinancing coming maturities and navigating near-term risks like tariffs, rates and economic uncertainty.

"Our borrowing clients certainly feel a lot more positive than in March and April," Stegemeyer said. But they also continue to be pragmatic and patient around their financing needs, as well as around capital expenditures and investments, he added.

The below chart, from BofA Global, shows that U.S. companies in June with investment-grade ratings issued only $4.5 billion in bonds that mature beyond 10 years - a trend that's been evident all year.

Barclays analyst pegged 30-year issuance at only 11.2% of the total supply this year - near the lowest level since 2011, and reflecting a backdrop where companies are "very uncertain about their futures," they wrote in a Friday client note.

Avoiding commitments

Access to stable funding has long been considered a key to success in the business world. But the tone started shifting as the Federal Reserve started hiking interest rates in 2022 - resulting in companies issuing fewer longer-duration bonds, and waiting for lower rates.

Then came President Trump's sweeping second-term policy agenda, which has amped up uncertainty, with bond giant Pimco noting recently that politics now drive the economy instead of the other way around, turning the old world order on its head.

Still, there's a need for relatively low-risk, longer-duration assets that underpin annuities, pensions, retirement plans and other financial products designed to provide income for years to come. Bloomberg News recently reported that competition has pushed insurance companies seeking yield into riskier areas like private credit.

What's more, older U.S. investment-grade corporate bonds have been repaying, leaving holders with cash in need of a new home. The below BondCliQ chart shows U.S. investment-grade corporate bonds by maturities, with the biggest slug coming due in 2027. After that, volumes really drop off after 2032, making sources of income less clear.

Fitch Ratings in May noted that nearly a fifth of the roughly $6 trillion U.S. investment-grade corporate bond market faces maturities through 2027.

Meanwhile, Trump has been a frequent critic of Federal Reserve Chair Jerome Powell's wait-and-see approach to cutting rates. Yet there's no guarantee that Fed rate cuts, on their own, would result in lower 10-year BX:TMUBMUSD10Y and 30-year BX:TMUBMUSD30Y Treasury yields, which are pegs for pricing corporate bonds.

Bigger yield drivers have been concerns about the large U.S. fiscal deficit, foreign demand for American assets, and inflation - factors that already helped push the 30-year yield above 5% earlier this year. The yield has since retreated to 4.82%, but concerns around tariffs and the U.S. economy remain.

Art of the wait

Tariffs have been a "dark cloud" hanging over major U.S. companies, even though most have strong balance sheets, said Tom Murphy, head of U.S. investment-grade credit at Columbia Threadneedle Investments, in a June press briefing.

Yet with stocks back to record highs, investors have been flocking to bonds, Murphy said.

Flows into U.S. investment-grade bond funds were $124.6 billion so far this year, according to Winston Chua, an analyst at EPFR, part of ISI Markets. Those look more moderate than in the past few years, he noted, but appetite for yield and safety continues, especially in liquid, passive vehicles.

Demand has been outstripping new investment-grade bond supply, said Stegemeyer, the syndicate banker at U.S. Bancorp, while the tone also has improved in funding markets.

"Issuers are getting a little more comfortable with the political backdrop," Stegemeyer said - though adding that you never know what might change on any given day.

Trump briefly rattled Wall Street Friday after saying that he was "terminating ALL discussions on Trade with Canada, effective immediately," in a social-media post.

Canada subsequently backed down on the digital-services tax that was the target of Trump's ire, but investors also have been geared up to buy such dips in the stock market - with the S&P 500 SPX and Nasdaq Composite COMP on Monday pushing deeper into record territory.

Read: A 2-month rally pushed the stock market to record highs - but watch for these risks in July.

"I'd say that the lack of 10-plus-year issuance is clearly a result of overall uncertainty, especially on the rates front," said Winnie Cisar, global head of strategy at CreditSights, in an email to MarketWatch.

Cisar also thinks there's reason for optimism around the trajectory of interest rates, particularly if the 10-year Treasury yield falls by 100 basis points and credit spreads hold mostly steady.

"Then companies will benefit from waiting out the elevated rates," she said - noting that in such a scenario, companies could potentially see the cost of capital decrease by at least 75 basis points.

Several major bond ETFs also were rallying Monday, with the iShares Core U.S. Aggregate Bond ETF AGG up 0.2%, the iShares iBoxx $ Investment Grade Corporate Bond ETF LQD 0.3% higher and the SPDR Bloomberg High Yield Bond ETF JNK adding 0.2%, according to FactSet data.

-Joy Wiltermuth

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

June 30, 2025 13:23 ET (17:23 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.