A record number of blue-chip firms are swarming the US corporate bond market on Tuesday, taking advantage of cheaper borrowing costs as they look to issue debt ahead of the US presidential election.

Ford Motor Credit Co., Target Corp. and Barclays Plc are among 29 companies tapping the bond market, the busiest single sales day for the market on record, according to data compiled by Bloomberg. Debt underwriting professionals at banks expect corporations to borrow about $125 billion through US high-grade bond sales in September.

The issuance deluge comes as corporate finance chiefs aim to lock in borrowing costs while yields are relatively low. Average all-in yields have fallen below 5%, and risk premiums averaged about 0.93 percentage point, or 93 basis points on Friday, the lowest since July 31.

The day after US Labor Day, which often marks an informal end to summer as beaches and pools close and schools resume, is usually busy for the corporate bond market. Last year, it was the most active sales day of 2023, with $36.2 billion of debt priced by 20 firms.

“Summer is officially over and companies are looking to borrow now while the market is open,” said Matt Brill, head of North America investment-grade credit at Invesco. “We traditionally see a pickup in issuance post Labor Day but this is even busier than we would have expected.”

Company finance chiefs that need to borrow this year or even next year have been looking to sell bonds before October, when bond yields might start moving in unexpected directions ahead of the November US presidential elections. Interest-rate markets expect the Federal Reserve to start cutting short-term rates this year, but those cuts are already largely reflected in longer-term bond prices.  

High-grade corporate bond sales on Tuesday are expected to be a record, measuring by the number of issuers. But the outlook for September of about $125 billion of issuance is in line with the total for the same month last year. The five-year average for September is $136 billion, according to Bloomberg data. 

Sales of the debt have been high in part because investors are so eager to snatch up securities, to lock in higher yields before the Fed cuts rates.

“Just as night follows day, massive demand globally for corporate bonds will beget supply,” said Bill Zox, a portfolio manager at Brandywine Global Investment Management. 

This article was provided by Bloomberg News.