So curly in history! American corporate bonds primary market "fighting to break head" Barclays index reveals unprecedented fierce competition.

Barclays Bank pointed out that the strong demand for US corporate bonds is driving the primary market to show the most intense competition in history, while also boosting the trading activity in the secondary market significantly. According to Barclays' proprietary competition index (an index used to measure market concentration and competition, benchmarked against the commonly used Herfindahl-Hirschman index), the level of competition in the US high-grade and junk bond markets has surpassed any period since 2017. Barclays strategists released a report on Wednesday, stating that in the first half of 2025, the competition intensity in the high-grade bond market was 15% higher than in 2017, while the junk bond market was approximately 30% higher. Between 2017 and 2025, the competition intensity for high-grade bonds over $1 billion increased by about 30%, and for high-yield bonds over $750 million, the competition intensity increased by 26%. This analysis covers over 10,000 high-grade and high-yield bond issuances between January 2017 and June 2025, as well as over a million initial investor bond allocations recorded in the TRACE system. Barclays attributes the strong investor demand to the increasing number of funds competing for new bond issuances, the continued growth in demand from foreign investors, and the decrease in liquidity premium in the secondary market. The report mentions that funds participating in primary market transactions (including ETFs and index funds) have significantly expanded market participation, with demand diversified across multiple instruments; buying interest from US life insurance companies has also intensified competition. Since 2024, the long-term holdings of US corporate bonds by foreign investors have grown by approximately 10% year-on-year, marking the first consecutive two years of positive growth since the global financial crisis. Investors who were unable to secure new bonds in the primary market have driven increased trading activity in the secondary market. Data shows that in 2025, high-grade bonds over $1 billion had a turnover rate of 26% in the first 10 days of listing, a 73% increase from 2017; almost one-third of this growth can be directly attributed to intense competition in the primary market. Meanwhile, the time taken for the first secondary market transaction after a bond listing has almost halved from 60 minutes before 2022 to 20-30 minutes. Improvements in secondary market liquidity have reduced the risk premium (the additional compensation that investors demand for holding less liquid bonds), which in turn has encouraged investors to actively participate in the primary market, creating a positive cycle. Looking ahead, Barclays expects the volume of new US corporate bond issuances in 2026 to break historical records, driven by increasing refinancing needs, rising leverage in acquisitions and mergers, and capital expenditure expansion driven by artificial intelligence and infrastructure investments.