The most competitive in history! US corporate debt primary market "fighting fiercely" Barclays index reveals unprecedented intense competition

According to Cailian Press APP, Barclays Bank pointed out that strong demand for U.S. corporate bonds is driving the primary market to experience the most intense competition in history, while also significantly boosting trading activity in the secondary market.

Based on Barclays’ proprietary Competition Index (comparable to the commonly used Herfindahl-Hirschman Index, used to measure market concentration and competition), the level of competition in the U.S. high-grade and junk bond markets has exceeded 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 is 15% higher than in 2017, while in the junk bond market it is about 30% higher. Between 2017 and 2025, the competition intensity for high-grade bonds with a scale over $1 billion has increased by approximately 30%, and for high-yield bonds over $750 million, it has increased by 26%.

This analysis covers the issuance of over 10,000 high-grade and high-yield bonds from January 2017 to June 2025, as well as over one million bond allocation records for initial investors recorded in the TRACE system.

Barclays attributes the strong investor demand to: a surge in the number of funds competing for new bond issuance, sustained growth in overseas investor demand, and a decline in liquidity premiums 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 dispersed across various tools; the buying activity of U.S. life insurance companies has also further intensified competition. Since 2024, the scale of long-term holdings of U.S. corporate bonds by overseas investors has increased by about 10% year-over-year, marking the first consecutive two-year positive growth since the global financial crisis.

Investors who failed to secure new bonds in the primary market have turned to boost secondary market trading. Data shows that for high-grade bonds over $1 billion in scale in 2025, the turnover rate in the first 10 days after listing rose to 26%, a 73% increase compared to 2017; nearly one-third of this growth can be directly attributed to fierce competition in the primary market.

Meanwhile, the time taken for the first secondary market transaction after bond listing has nearly halved from about 60 minutes before 2022 to 20-30 minutes.

Improved liquidity in the secondary market has lowered risk premiums (the extra compensation investors require for holding less liquid bonds), which in turn encourages investors to actively bid in the primary market, creating a positive feedback loop.

Looking ahead, Barclays expects the new issuance scale of U.S. corporate bonds in 2026 to hit a record high, driven by factors such as increased refinancing needs, rising leveraged buyouts and M&A activities, and capital expenditure expansion fueled by artificial intelligence and infrastructure investments.