Era of Ultra-Cheap Money Begins to Fade in Corporate Bond Market
- Gap between bond coupons and borrowing costs is shrinking
- Some companies will ‘exhaust’ their refinancing cushion: BofA
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Companies around the world are losing the ability to eke out more savings on their borrowing costs as the post-pandemic era of cheap cash fades.
For at least a decade, companies have usually been able to replace maturing bonds with lower-coupon debt. While that’s still the case, the gap between existing bond coupons and current yields on the Bloomberg Global Agg Corporate Index, which excludes financial companies, has shrunk to its smallest since April 2020 as the wave of pandemic-era stimulus retreats.