Issuance from utility companies has also surged amid capital expenditures to support power demand from data centers and electrification. Offerings from that sector have risen 18% this year compared with the same period in 2023 (as of October 10). “There’s no question that we’ve seen a huge uptick in capex from the utility sector, and a big way in which the utility sector will fund that capex is through debt issuance, Sales says.”
Money may flow from short-term debt to longer-term bonds
As the Fed lowers interest rates, reducing the yields on shorter-maturity debt, money is poised to flow increasingly into longer maturity investment-grade bonds, Sales says. Many investors have been able to buy short-term Treasury bills yielding more than 5%, but that yield is falling.
“I would expect that money will migrate away from high yielding T-Bills and into the investment-grade asset class,” Sales says. “That’s something we are in…
