Debt issuance rose sharply in the first half of 2023 as US companies returned to the bond market.

Issuance by nonfinancial corporations totaled $397.71 billion in the first six months of the year, up 36% from $292.94 billion in the first half of 2022, according to data from S&P Global Market Intelligence.

Uptick despite rising rates

Despite this increase the volume remains 20% lower than the same period in 2021 and half the amount in the first half of 2020 — the peak year for bond issuance — when companies took advantage of cheap borrowing rates and the Federal Reserve's injection of liquidity into financial markets.

Bond issuance tailed off in 2021 as companies boosted their cash ratios to healthy levels and then declined sharply in 2022 as interest rates rose, increasing the cost of borrowing. Some $510.67 billion of corporate debt was issued in 2022, down from $875.39 billion in 2021 and $1.189 trillion in 2020.

Reduced bond issuance has been apparent in the decline in mergers and acquisitions, which often involve debt financing. A rebound in M&A activity in March could have contributed to the pickup in issuance in 2023; at the same time, some companies have been forced back into the debt market to refinance debt as old debt matures.