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As expected, 2026 opened with a bang as borrowers stormed into the US investment grade bond market to kick start what many feel could be the largest year for gross issuance ever in the asset class.

Borrowers effectively matched last year’s opening pace by pricing nearly $79bn across 99 tranches in a supply storm that was mostly dominated by financial supply.

Yankee banks were the focus as US major banks sat on the sidelines until they jumpstart earnings season next week with 2025 Q4 results.

This week’s cohort included nearly all the major French banks, a few of the biggest Japanese banks, and Canadian FIGs that were eager to tap the market at low rates. We covered the issuance in greater detail here.

One deal of note was from UBS, which is facing a few new headwinds since it was last in the market.

The Swiss government is deciding how much capital reserves UBS will have to hold and whether AT1 debt will count toward those buffers. A judge has also opened the possibility that UBS would have to pay investors for Credit Suisse AT1 debt that was previously written down.

Even with those overhangs, UBS managed to price $3bn perpetual notes in two parts that tightened to yields inside of its previous comparable dollar notes.

Corporate issuance also had an international flavor to it with European telecommunications company Orange pricing a $6bn five-part bond package — the largest deal from any issuer on the week.

It was the mobile and fiber internet provider’s first dollar deal in nearly a decade and its largest ever in the currency, which continues the trend of Yankee corporates returning to the US for its greater depth, as we wrote this week.

Automotive companies Toyota, Daimler Truck, Mitsubishi, Honda, Ford and General Motors all priced corporate deals this week as well with several tranches across issuers tightening by 30bps or more through price progression.

M&A in the pipeline

Orange will use the funds from this week’s deal to complete its acquisition of the other 50% stake in its Spanish subsidiary MasOrange. It’s the first of what is expected to be a big year for M&A volumes.

Some of the bigger deals in the pipeline — such as Union Pacific’s takeover of Norfolk Southern or Netflix’s bid for Warner Bros. Discovery — may not hit the market until the final quarter of 2026 or maybe not even until 2027, sources noted.

But investors are still gearing up for some sizable deal from the likes of Disney, AT&T and T-Mobile.

The energy sector could also be fertile ground for acquisition activity, especially if companies get interested in staking a claim in Venezuela. The market was largely unaffected by President Trump’s operation over the weekend to capture President Nicolás Maduro but there could be some long term consequences in the region.

We covered the effects on IG and HY rated corporate issuers here, as well as what it means for LatAm debt here.

Outsized demand

Order books were well oversubscribed this week, suggesting that investors are still keen to buy despite the tight spreads and expectations for a flood of supply that could reach $2trn this year.

As we discussed at the end of last year, that number is a little deceiving because much of the supply will be to refinance a very large 2026 maturity wall. Indeed, nearly all the issuance this week — save for the Orange bonds — were used for refinancing purposes.

Even so, demand was outsized. Some suggested that insurance accounts — which typically buy on yield — are ignoring the tight spreads and looking to buy now before more rate cuts come in the back half of this year.

Jobs numbers this morning showed unemployment ticking down to 4.4% from 4.5%, which is likely enough to keep the Fed from cutting rates again later this month but still keeps a March rate cut in play, sources said.

But perhaps what’s more important than the economic numbers is who Trump picks to be the next Fed Chair. Some investors may be playing a bit of game theory to buy bonds now while rates are still relatively high ahead of what could be a 50bps-100bps cut from a more dovish Fed, said Adam Abbas, head of fixed income at Harris’ Oakmark Funds.

Deep cuts in the back half of the year could actually steepen long-end curves, he added, but even so, insurance buyers are out in force to pick up long-dated supply at current levels and while the economy is in a relatively stable position.