Since the start of the year, both large U.S. corporations and small businesses have faced a highly uncertain financial landscape. With rising interest rates, imposing tariffs, and a volatile political environment, the level of uncertainty is unprecedented. This ongoing turmoil has stalled essential planning for growth and borrowing, leaving many organizations desperate for clarity and direction.
According to Bank of America Global Research, “U.S. companies with investment-grade ratings have issued a mere $4.5 billion in bonds maturing beyond 10 years, a staggering decline from over $40 billion in February 2024.” In addition, Barclays analysts highlight that 30-year bond issuance has plummeted to just 11.2% of the supply, the lowest it has been in 15 years.
This dramatic reduction in long-term bond issuance, a vital source of capital for corporate and municipal growth, raises significant alarms. The hesitancy to engage in long-term borrowing signals a wait-and-see mentality regarding the future of interest rates, the economy, and taxation, which threatens to stifle growth and strategic planning.
While U.S. Treasury borrowing is set to surge in the second half of the year, it’s crucial to note that much of this issuance will be for terms of seven years or shorter. The implications are clear: we must act decisively to navigate this shifting landscape and for long-term investors, now may be the best time to lock in those long maturity yields.
