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Companies Race to Borrow Before Fed's Easing Ends Companies Race to Borrow Before Fed's Easing Ends

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Economy / finance

Companies Race to Borrow Before Fed's Easing Ends

photo of Clifford Marks
May 18, 2011

American companies are rushing to borrow out of concern that interest rates will rise when the Federal Reserve's bond purchases come to an end next month.

Investment-grade companies sold $19 billion of bonds in the U.S. in the past two days alone, The Wall Street Journal reports, citing data provider Dealogic. That puts this week on pace to be the busiest of the year. May bond sales, now at $56.7 billion, have nearly eclipsed April's $59.6 billion total with two weeks still left in the month. The rush comes as interest rates have reached their lowest levels this year.

"Rates are so low it's hard to see them going much lower, but it's easy to imagine them going higher," Kevin March, chief financial officer of Texas Instruments, told the newspaper. His company sold $3.5 billion of debt in its first offering since 1999. At current rates, he said, "you just shake your head and say, 'This is pretty amazing.'"

 

The Fed's $600 billion bond purchase program -- known as quantitative easing, or QE2 -- sought to bring down interest rates to encourage economic growth. Fed Chairman Ben Bernanke signaled last month that the Fed would not renew such purchases after the current round sunsets in June.

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