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

Barclays Bank points out that the strong demand for U.S. corporate bonds is driving the most intense competition in the primary market in history, while also significantly boosting activity in the secondary market.

According to Barclays’ proprietary Competition Index (comparable to the commonly used Herfindahl-Hirschman Index in the market, 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, competition 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, competition for high-grade bonds exceeding $1 billion has increased by approximately 30%, and for high-yield bonds over $750 million, competition has risen 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 in the TRACE system aimed at initial investors.

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 multiple instrument types; purchases by U.S. life insurance companies have also further intensified competition. Since 2024, the long-term holdings of U.S. corporate bonds by overseas investors have increased by about 10% year-over-year, marking the first two consecutive years of 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 size, the turnover rate in the first 10 days after listing rose to 26% in 2025, 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 around 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 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 activity, and expansion of capital expenditures fueled by artificial intelligence and infrastructure investments.