Apple, Microsoft and Oracle were among the top 10 largest non-financial borrowers in the market last year, issuing both short-term and long-term debt, data compiled by Bloomberg show. This year, none of the three has sold bonds. Representatives for Apple, Oracle and Microsoft declined to comment.
It’s already making a dent in corporate-bond issuance. Sales of $888.6 billion this year are down from $1 trillion for the same period last year, putting the market on pace to snap a seven-year run of rising debt sales. The drop would likely be even steeper if it weren’t for a global surge in mergers and acquisitions that’s fueling other funding needs.
The companies will likely return to the market when they need to refinance, but not with the same frequency or size, said Jon Duensing, director of investment-grade credit at Amundi Pioneer. So rather than the $30 billion that a company would issue each year at the peak of its cash-hoarding, it could come back with about $2 billion annually, he said.
As for the interest rates on the debt, the days of borrowing for virtually nothing are in the past, analysts say.
“I don’t see front-end selling by corporate treasuries changing anytime soon,” said David Knutson, head of credit research for the Americas at Schroder Investment Management. The front end of the so-called credit curve, he said, “will never be the same.”
This article provided by Bloomberg News.