Debt-Ceiling Fight Sends Investors Hunting for New Havens

Investors are swapping their go-to safe haven for bonds issued by top-rated American companies such as Microsoft and Johnson & Johnson ahead of a potential U.S. default, producing a rare twist in debt markets and boosting total fundraising in May to nearly $125 billion.

May 24, 2023 . 1:59 PM

1 min read

Investors are swapping their go-to safe haven for bonds issued by top-rated American companies such as Microsoft and Johnson & Johnson ahead of a potential U.S. default.
This trading has produced a rare twist in debt markets: corporate bonds that are trading at a yield discount to Treasurys.
Wall Street analysts often use Treasury yields as a stand-in for the minimum return they would require of any other investment, because all other securities are presumed riskier.
Most investment strategists still think a default is unlikely, but they are nonetheless carefully planning for the possibility.
Last week brought the biggest tally of fresh investment-grade bond sales in 14 months, boosting total fundraising in May to nearly $125 billion.