Investors chase scarce 30-year corporate bonds as issuers pull back

Investors have shown intense appetite for 30-year corporate bonds, submitting orders many times the amount of new issue, as seen when Aon sold $2 billion of such notes and GSK sold $500 million. The surge is driven by higher yields on long-term debt amid inflation concerns and recent central-bank rate hikes, yet issuers are shying away to avoid locking in high interest costs for decades. Consequently, only about 5 % of US investment-grade bonds issued in early September mature in 30 years or more, the smallest share since at least 2020, and European and Asian markets show comparable declines.

The shortage pressures insurers and pension funds that need long-dated assets, while companies may face more frequent refinancing. Major borrowers such as Alphabet and Amazon have already flooded the market with long-dated debt, crowding out other issuers. Analysts note the average maturity of US high-grade bonds has slipped from a peak of 12.4 years to about 10.3 years as the market readjusts.