Editor's Note: Below is a brief excerpt from today's Early Look written by Hedgeye Director of Research Daryl Jones. Click here to get a free month subscription to the Early Look.
There has been a serious tail wind of corporate debt issuance for at least the last three years. In fact, U.S. companies have sold more than $734 billion on bonds this year through early August. With that pace, U.S. companies should comfortably sell more than a trillion in bonds for the third year running.
As highlighted in the Chart of the Day, along with this record level of debt issuance is a record low level of yields. In fact, the effective yield of the BAML high yield index fell to ~5.4% earlier this summer. For comparisons sake, this is very close to the record low of ~5.2% that the index touched in 2014. For you bond gurus, the average duration of investment grade debt is also now at a record high of 7.5. Needless to say, the corporate debt sails are wide open!