U.S. Borrowing Costs Hit 17% as Bond Sell-Off Raises Corporate Debt Risks

Borrowing costs for some of America’s riskiest companies have climbed to 17%, their highest level since the COVID-19 period, as a sell-off in U.S. bonds pushes financing costs higher across corporate America, according to information cited by Coin Bureau from the Financial Times.

The rise comes as higher Treasury yields put additional pressure on companies that rely on debt markets for refinancing and new funding. The increase in borrowing costs is occurring alongside a sharp move in the U.S. government bond market, with the 10-year Treasury yield reaching its highest level since 2002 last week.

Higher Yields Pressure Corporate Borrowing

The increase in Treasury yields is feeding into corporate debt markets, where borrowing costs vary depending on the credit quality of the issuer. Companies considered among the riskiest borrowers are now facing costs as high as 17%, according to the figures cited by Coin Bureau.

The broader impact is also visible in expectations for investment-grade corporate bond issuance. Bank of America has cut its forecast for investment-grade bond sales this month to $110 billion, down from about $160 billion previously.

The reduction in the forecast points to a more challenging environment for companies seeking to raise funds through the bond market, although the figures cited do not identify a specific cause for each company's financing decision.

Paramount Bond Sale Faces Pressure

One prominent example cited in the report is Paramount's $52 billion bond sale connected to its Warner Bros deal. The bonds sold off shortly after the offering was launched, illustrating the pressure facing large corporate debt transactions as borrowing costs rise.

The development comes as a significant amount of U.S. investment-grade corporate debt approaches maturity. Moody's estimates that a record $1.45 trillion of U.S. investment-grade debt will come due between 2026 and 2030.

That maturity schedule means companies will need to refinance a substantial volume of existing obligations during a period when market borrowing costs have moved sharply higher. The figures cited by Coin Bureau and the Financial Times show the scale of the refinancing exposure without providing a forecast for how individual companies will respond.

Borrowing Costs Reach a Key Historical Level

Coin Bureau noted that the last time borrowing costs were at similarly high levels, the Federal Reserve had cut interest rates to near zero. The comparison underscores the unusual combination of elevated corporate financial costs and the current level of Treasury yields.

With the 10-year Treasury yield at its highest level since 2002 last week and $1.45 trillion of U.S. investment-grade debt scheduled to mature between 2026 and 2030, corporate borrowers are facing a markedly more expensive debt market than in recent years.

Writer: Victoria Hale
Technology & Blockchain Writer

Victoria Hale writes about blockchain technology, digital infrastructure, and the intersection of emerging technologies with finance. Her articles explore how new protocols and systems are shaping the evolving digital economy.

She prioritises clarity and accuracy when explaining technical developments to a general audience.

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