Companies globally are piling into debt markets to sell bonds and loans while they still can.

Ford Motor Credit Co, Formula 1, Brazil’s Petrobras and Saudi Arabia’s sovereign wealth fund were just a handful of the issuers tapping debt markets on Tuesday, capitalising on cheap funding costs ahead of potential spikes in yields in the coming months tied to the US presidential election.

Nearly 30 blue-chip companies sold about US$43 billion of bonds in the US market on Tuesday, the busiest single sales day by number of issuers, according to data compiled by Bloomberg. In Europe, 24 companies and government-tied issuers raised €22.60 billion from debt markets, adding to Monday’s €11.5 billion-plus issuance. Among Asian borrowers, the Indonesian government came to the market.

The deluge comes as corporate finance chiefs are eager to lock in more favorable borrowing costs. Bond yields on global investment-grade corporate debt averaged 4.52% as of Tuesday’s close, near their lowest level in about two years.

“For issuers that are looking to print a low coupon, you could clearly see why they would be hitting the market at this point,” Robert Tipp, the chief investment strategist and head of global bonds for PGIM Fixed Income, said in a phone interview.

Bond investors on Tuesday brushed aside growing worries over corporate profitability that sent US stocks to their worst day since the market crash early last month.

At first blush, the debt spree may seem a bit counterintuitive, given that markets are widely expecting the Federal Reserve (Fed) to start cutting rates this month, and lower borrowing costs are good for corporate issuers.

But yields could be pushed in unexpected directions if the Fed doesn’t reduce rates fast enough or if the US elections spur market volatility. That has led finance chiefs who need to borrow this year or even next year to do so before October.

The bond blitz extended even to Latin American borrowers, marking the region’s busiest day for hard-currency debt issuance this year. The Uruguayan government, and lenders BBVA Mexico SA and Banco de Credito Del Peru joined Brazilian oil giant Petrobras in selling dollar notes on Tuesday.

Apart from Ford, firms like Target Corp and General Motors Financial Co Inc also rushed to the blue-chip bond market on Tuesday. Uber Technologies Inc, meanwhile, sounded out investors for its potential first investment-grade bond sale. US high-grade bond sales are expected to reach US$125 billion this month, in line with last September’s US$124.1 billion.

Speculative-grade companies also got in on the action on Tuesday, launching more than US$17 billion of deals via the high-yield bond and leveraged loan markets, far outpacing last-year’s post-Labor Day activity.

Lenders that have been especially hungry to provide debt for new acquisitions and leveraged buyouts are finally seeing that supply hit the market. Formula 1 kicked off a US$850 million leveraged loan sale to help fund its owner Liberty Media Corp’s acquisition of MotoGP World Championship. A US$2.05 billion leveraged loan sale launched on Tuesday to finance the buyout of educational-software company Instructure Holdings Co.

A slew of companies are also tapping investors for refinancings and dividends. TransDigm Group Inc is offering US$3 billion of new debt to fund a special cash dividend to shareholders that could reach US$4.5 billion.

To John McClain, a portfolio manager at Brandywine Global Investment Management, a combination of favourable borrowing costs and the need to get ahead of the US election has fueled the issuance frenzy.

“August lulled investors into tight spreads combined with ever strong demand for credit,” he said. “Issuers can borrow at rates we haven’t seen in a couple of years.”

  - Bloomberg