Hot Summer for High-Yield Bond Issuance
August 14, 2025
July was especially busy for high-yield (HY) corporate credit investors in the primary market. We saw a huge wave of new bond issuance as HY rated companies took advantage of the wide-open debt capital markets. Companies came to market to meet strong investor appetite for corporate bonds. This is a stark rebound from where the market was earlier in the year around “Liberation Day.” At that time, overwhelming uncertainty essentially froze the debt capital markets, and investors were less likely to lend to companies, not knowing what company profits may look like in a few months. Now that those headlines are behind us and the impact of tariffs is likely less severe, there has been a strong rebound in the primary market. As displayed in today’s Chart of the Week, this dynamic has led to the busiest July for junk bond issuance over the past two decades, with over $31 billion of new issuance.1
Strong supply is continuing into August alongside robust corporate earnings and the expectation of rate cuts this year. This supply has driven HY bond spreads to near-historic lows, relative to the past 25 years,2 making it harder to find good value in such a booming market. As a result, investors have dipped lower into credit quality to achieve yield. In July, lower quality CCC-rated bonds were the best performing asset class in HY as BB, B and CCC issues returned 0.20%, 0.32% and 1.47%, respectively.3 Finding cheap HY bonds has been a challenge, creating a haves and have-nots scenario. Good, higher-quality credit has been trading exceptionally tight, while the have-nots are trading much wider.
Key Takeaway
Appetite for yield, tight spreads and strong demand for new paper pulled borrowers into the market this summer. HY rated companies took advantage of the debt capital market to sell more than $31 billion in July. June was also a busy month, pricing more than $37 billion, which was the busiest since September 2021.4 With August off to a strong start as well, we’re experiencing a hot issuance market.
Sources:
1-4Bloomberg
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