Source: First Finance
Author: Li Ailin
American companies are scrambling to issue debts in advance to prevent the two parties from being deadlocked on the issue of debt limit, and this summer has caused market turmoil.
The scale of US corporate bond issuance has increased
According to the data company Dealogic data, since May, the size of bonds issued by high -rated companies in the United States has reached $ 112 billion (S $ 150.8 billion), far exceeding the total size of last May last year, which has reachedMore than three times in April.When the epidemic raid the United States in 2020, the ultra -low interest rate gave birth to a debt financing wave of $ 196 billion. After removing this abnormal value, the corporate debt issuance of the corporate debt reached a seven -year high this month.
The banking industry responsible for related businesses said that bond issuers hope to make full use of the current relatively active market environment and rush to raise funds to investors before the U.S. government has exhausted cash and set off a wave.
Richard Zogheb, director of the global bond capital market of Citi Bank, said that the speed of issuance of corporate bond issuance has indeed accelerated a certain degree, which mainly reflects the issuer's mentality. First, try to avoid the debt limit negotiation farce.On the other hand, the current good market conditions are used. In addition, the economic prospects also affect the decision -making of debt issuance.In the past year, the Federal Reserve has adjusted the federal fund interest rate from nearly zero to 5.00%-5.25%. At the same time, concerns about the decline of the US economy in the United States have also intensified.
Zogb also revealed that those who chose to act in advance are those companies originally planned to issue debts in June or July.
Dan Mead, head of the Bank of America, also said that the company was aware of the existence of many risk events, so the financing plan was advanced."The upper limit of debt, the Federal Reserve's interest rate hike, and the economic prospects have led to the above phenomenon." Made said.
DEALOGIC data shows that 56 companies have priced their investment -level bonds this month. More than two -thirds of financing income are mainly used for mergers and acquisitions, which hit a new high since December 2021.People familiar with the matter revealed that Biopharmaceutical Company Pfizer, Ovintiv Ovintiv, and IQVIA of Life Sciences all issued bonds last week, which is slightly earlier than the original plan.
The deadline is approaching
On the 21st local time, the Minister of Finance Yellen reiterated in an interview with foreign media that on June 1st, the "hard period" (hard deadline "to increase debt limit or bears the risk of breach of contract, the government obtained sufficient financial income to supportThe possibility of until June 15 is quite low.Earlier, she warned that on June 1st or the earliest breach of contract, if Congress did not further increase the upper limit of US $ 3.1.4 trillion, the United States would face difficult choices.
"Since 1789, the United States has a tradition of paying bills on time. This is a promise that the world wants to continue to see, and it is also the cornerstone of US debt to become the safest assets in the world.Yes. "Yellen said.
Goldman Sachs Economist predicts that unless the debt limit is raised, the cash holdings of the Ministry of Finance will fall below the $ 30 billion lower limit on June 8th or 9th.EssenceIn order to meet the government expenditure, the Ministry of Finance's cash balance has been steadily decreasing. According to the Gaosheng report, as of the 11th, the cash balance was only slightly higher than 57 billion US dollars, and the balance of the previous day was about 92 billion US dollars.
The bank economist wrote in a recent report that it is believed that Congress will avoid overdue payment. It is expected that the possibility of a consensus on the two parties this week is 30%, and the probability of reaching an agreement at the last moment is also 30%.
Will the US rating be reduced again?
A recent default crisis in the United States occurred in 2011. At that time, the US President Obama and the Republicans of the House of Representatives, at the last moment, barely avoided a disaster by increasing the debt limit and cutting deficit bills, but the tension caused by thisIt triggered a fierce fluctuations in the global capital market, which led to the rating agency's S & P underwritten US sovereign credit rating, and the prospects were listed as negative.
After 12 years, will history repeat it?
The rating agency Fitch said in a report sent to the First Financial reporter that "the global reserve currency status of the US dollar and the huge market size of US debt have allowed the federal government to obtain credit almost unconditionally and unobstructedly.However, due to the lack of medium -term fiscal framework and a perfect budget management system, the country has failed to reverse continuous debt growth caused by economic impact and other financial measures. "
Fitch predicts that due to the polarization of politics, in the next few years, the two parties will start more confrontation around the debt limit. The United States has repeatedly closer to the breach of contract, which may shake people's confidence in their repayment capabilities and resisting political disorders, and it may be possible.Affects the view of Fitch rating on US sovereign credit status.
Moody's Investor Service Company told the First Financial reporter, "Our basic scene is that although the political environment is turbulent, the legislators will eventually increase the debt limit or set the time limit for the setting of the debt before the" day "comes.However, the incident uncertainty itself is accumulating credit risk. "
"We will attribute the failure of the United States to pay the interest payment as a breach of contract, which will lead to the reduction of US sovereign rating, including financial institutions, non -financial companies, non -profit organizations and other US debt issuers will also be affected accordingly."The agency said.
