A new weekly record was set last week in global corporate bond sales, with investors grabbing hold of around $140 billion in new bonds according to data from Dealogic. This occurs against a backdrop of negative yielding debt, and the meteoric rise in popularity of stablecoins and exchange-native tokens across the crypto space. The near ubiquitous presence of coins like USDT on major exchanges, and the still nascent wave of exchange tokens like Binance’s BNB, signal a new era of cryptocurrency trading and investment. What remains unclear, however, is what separates these coins from traditional, legacy systems of investment such as their corporate bond cousins, and what all the hubbub is really about.
The Good Ol’ Corporate Bond
Corporate bonds are a debt security a lot like government bonds, but with generally higher interest rates due to higher risk. An investor buys a corporate bond, receives regular interest payments until the bond matures, and at that time can claim the face value of the agreement. In short, it’s another way of financing debt, bonding the corporation to voluntary debt holders until bond maturity, when the par value must be paid to the investor.
Last week’s record investment spree in companies like Apple, Disney, and Coca-Cola is notable because companies are refinancing debt thanks to a surge in investment brought on by dismal corporate yields elsewhere, especially Japan and Europe. This is the first time Apple has borrowed through the bond market since 2017. In essence, they’re riding the waves created by sinking debt ships overseas. The situation with government bonds in many countries is also extremely bleak, with record negative yields being hit