Goldman Sachs Reports Record Risk Premium Amid Surge in U.S. High-Yield Bond Issuance

The U.S. high-yield bond market has seen a surge in corporate bond supply, pushing investors' absorption capacity to its limits. The pressure from the supply has caused spreads to soar, with the risk premium reaching its highest level in five months. In September, high-yield bond issuance amounted to $38.51 billion, marking the largest figure of the year, primarily driven by SoftBank Group's $10 billion bond issuance. Paramount Skydance is also pushing for a bond issuance of $44.4 billion this week. According to Bloomberg indices, the average spread for high-yield bonds is at 294 basis points, the highest since April, while the average spread for CCC-rated bonds has reached 968 basis points, setting a new record for 2023. Concerns have also been raised that high interest rate volatility could negatively impact investor sentiment. Goldman Sachs announced that the issuance of AI-related bonds is expected to reach $600 billion this year, predicting that the peak of AI-related bond supply has passed and will resume from 2027.

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