US bond investors poured another US$4.3 billion of cash into high-grade bond funds in the week ended Wednesday, the eleventh consecutive week of inflows, according to LSEG Lipper, as investors scramble to buy debt still offering decent yields.
The latest inflows into short- and intermediate-term investment-grade bond funds come after January saw the largest monthly inflow in five years at US$43.3 billion. The persistent inflows into funds have helped fuel demand for corporate debt sales this year.
High-grade companies have sold about US$309 billion of US bonds so far in 2026, up nearly 30% from this time last year, fueled in part by big offerings from tech companies including Oracle Corp. and Google parent company Alphabet Inc. Demand is strong enough that investors buying new bonds have placed orders for about 4.1 times the bonds that companies were actually selling on average.
And the extra yield that investors get on new bonds compared with a company’s existing securities, known as the new issue concession, has averaged just 0.02 percentage point, or two basis points this year, another sign of strong demand. Last year that figure was 3.3 basis points.
The risk premiums, or spreads, on US high-grade securities have narrowed 0.03 percentage point to 0.75 percentage point this year through Wednesday, close to the tightest levels in decades. That high valuation leaves little room for improvement, said Ayako Yoshioka, portfolio consulting director at Wealth Enhancement Group, who said she has a neutral outlook on credit.
igh-grade corporate debt yields averaged 4.8% on Wednesday, well above the two-decade mean of 4.15%, according Bloomberg index data, which is helping to fuel demand. A recent string of relatively encouraging US data, including higher-than-anticipated jobs growth in January, has assuaged some concerns about near-term weakening in credit markets.
Big tech companies known as hyperscalers are still expected to continue selling large amounts of debt. Morgan Stanley last year forecast that US high-grade issuance in 2026 could top US$2 trillion, a record, driven in part by artificial intelligence investments.