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Sept. 12, 2019, 8:00 p.m. EDT

A fear of rate surprises and market-moving Trump tweets has companies racing to issue cheap debt

A tweet can change the tone overnight

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By Joy Wiltermuth


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Many say President Donald Trump’s tweets are adding to volatility.

By now it is no secret that September kicked off with record U.S. corporate borrowing, driven in part by ultralow rates.

But the dash to issue debt early this September has come also as highly rated companies look to avoid central-bank surprises and dodge potential jolts sparked by President Donald Trump’s Twitter account.

“It speaks to the fact that volatility is real high and the narrative can change overnight based on a tweet,” said Jody Lurie, corporate credit analyst at Janney Montgomery Scott, in an interview with MarketWatch, of the rush of corporate borrowings.

“When they get the green light, they are not going to hesitate.”

Investment-grade U.S. corporations issued a record $90.4 billion of bonds in the first week of September, making it the busiest borrowing week ever in the sector, since Dealogic started tracking issuance 24 years ago.

The strongest borrowers of the batch, including Apple Inc. /zigman2/quotes/202934861/composite AAPL +1.11% , issued 30-year bonds while paying investors yields of less than 3%.

Ongoing borrowing this week brought the monthly high-grade corporate debt tally closer to Bank of America Merrill Lynch’s $120 billion to $130 billion issuance forecast for the month, even with a full two weeks still left on the calendar.

Kraft Heinz Foods Co /zigman2/quotes/203625533/composite KHC -2.21%  joined a handful of BBB-rated companies, with ratings on the cusp of high-yield, that tapped the bond market on Wednesday to borrow $5.7 billion, according to BAML data.

Read : Gundlach sees 75% recession chance, has a warning about the corporate bond market

Corporate borrowing even kept pace through Thursday’s European Central Bank’s policy meeting, which resulted in deposit interest rates being cut deeper into negative territory and a restart of monthly bond purchases.

Check out : ECB cuts key rate, relaunches QE to shore up eurozone economy

In the high-yield bond market, Uber Technologies Inc. /zigman2/quotes/211348248/composite UBER +1.30%  said Thursday it raised $1.2 billion through an eight-year debt offering that increased from an initial size of $750 million, a sign of market confidence in the ride-hailing company after its shares have tumbled 18% since its May IPO.

Meanwhile, bankers said corporate borrowers have been focused on tweets, tariffs and benchmark rates.

The 10-year Treasury note yield /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y +0.63% has been climbing in recent sessions, with Thursday seeing it touch a nearly six-week high of 1.723%. Bond prices move in the opposite direction as yields. Because corporate bonds also price at a premium over risk-free Treasurys, upswings in the benchmark can lead to higher borrowing costs.

Still, negative yields elsewhere have been a boon for U.S. high-grade borrowers.

/zigman2/quotes/202934861/composite
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