Three months after Covid-19 infected the corporate bond market, there has been an explosion in issuance. According to our corporate bond visualisation tool, there was a $500 billion increase in outstanding bonds between mid-March and June, based on Markit iBoxx data. That’s the same as the increase in corporate debt for all of last year.
At the same time, the market cap of the S&P 500 index has risen by about $6 trillion. Are these things connected? While some of the market cap rise might be a result of locked-down millennials buying stocks using the popular Robinhood app, equities have also been buoyed by the ability of companies to keep paying dividends and buying back shares in the face of the pandemic. With corporate earnings plummeting, the debt market was a handy place to raise the cash order to do that.