Aug 7 (Reuters) - A diverse group of highly rated companies was poised to raise $14.5 billion in new bonds on Monday to take advantage of strong investor appetite for quality corporate debt, getting ahead of potential volatility in the broader markets.
Nine investment-grade companies including utility San Diego Gas & Electric, medical supplier Thermo Fisher Scientific, tractor maker Caterpillar, Goldman Sachs, BNP Paribas and direct lender Sixth Street Specialty Lending were among those set to price new bonds on Monday.
"Companies are trying to do what they can to go ahead and lock in financing given a receptive credit market," said Blair Shwedo, head of investment grade trading at U.S. Bank.
Treasury yields are on the rise since last week and broader markets have turned volatile after the U.S. Treasury Department forecast higher than expected issuance for the third quarter and Fitch Ratings cut its sovereign U.S. credit rating.
Yet this has had little impact on demand for U.S. dollar bonds by investment-grade issuers, as investors are attracted to their all-in yields that were still higher than global peers.
"There is still an appeal in terms of all-in yield so you are getting some interest that is just due to the amount of carry (investors) can receive on investment grade," said Shwedo.
The demand has already helped to keep tight corporate bond spreads, or the premium that debt issuers pay over U.S. Treasuries.
At 122 basis points as of Friday, the average spread on investment-grade bonds is just a few points wider than its tightest levels touched by July's end, despite a pickup in market volatility, according to ICE BofA data.
"Our advice to borrowers with financing requirements in 2023 is to consider issuing debt now to take advantage of the recent tightening in credit spreads and the continued strong demand from investors looking to invest in this higher-yield environment," said Peter Aherne, co-head of debt capital markets in North America at Citigroup.
Some $30 billion of new investment-grade bonds are expected to sell this week before the Thursday and Friday release of U.S. inflation data - including July consumer price index (CPI) data - which could prompt more market volatility.
If supply meets estimates, August's tally could tick up to $45 billion by the end of this week, but would still lag behind forecasts for total August supply of $90 billion-$95 billion.
"Issuance is expected to be frontloaded this week before CPI on Thursday and then we are entering a very slow period in the (second) half of August," said Arvind Narayanan, Vanguard's co-head of investment grade credit and senior portfolio manager. (Reporting by Matt Tracy in Washington Additional reporting by Shankar Ramakrishnan in New York Editing by Matthew Lewis)