Highly leveraged companies are once again ramping up long-maturity loans amid an expected slowdown in the Federal Reserve's interest rate hikes.
This month, US corporate debt with maturities of 10 years or longer has increased by 9.5%. That was the largest increase since December 2008.
Nicholas Elfner, who is co-head of research at Breckinridge Capital Advisors, noted the 2022 spike in interest rates has primarily affected the long-term segment of the corporate debt market. He also stated that there is a current opportunity to invest in bonds of high-class companies at an atypically low price.
This week, investment managers are expecting signals from Fed Chair Jerome Powell about a slowdown in the pace of tightening. That is fueling interest in long-term corporate bonds trading at record-low prices, including bonds of giants such as Amazon and Verizon Communications Inc.