Corporate bond market reaches record highs in February

Data from Coalition Greenwich showed that average daily notional volume for corporate bonds reached $45 billion last month, up 22% compared to the same time period last year.

The corporate bond market has remained robust amid market turmoil, with average daily notional volume (ADNV) reaching record highs in February, according to a report by Coalition Greenwich.

In February, ADNV reached $45 billion, up 22% compared to February 2022 and surpassing the volume traded in March 2020.

The last days of January and February this year saw a total of $66 billion and $59 billion traded, respectively, with January figures setting the single-day trading volume record for US corporate bonds (including both investment grade and high yield).

Average daily trade count ended February was over 100,000 for the fifth month in a row, which Coalition Greenwich stated was a sign that retail demand remains. Data for the first half of March (through March 15) shows signs that notional volumes will remain over $40 billion a day, with trade counts over 100,000.

“The market turmoil, while certainly adding to corporate bond volume, has thus far had a much bigger impact on the US Treasury market,” said Coalition Greenwich in its report.

The electronic trading space also experienced a record month, achieving nearly $18 billion per day, which is up 28% from February last year. High-yield e-trading played a huge contribution, growing by four percentage points year-over-year relative to the total market.

“Investment-grade e-trading was flat year-over-year—however, the market is still looking for its next catalyst to drive IG e-trading beyond its current glass ceiling,” added Coalition Greenwich.

Elsewhere, ETF-to-cash ratio in February came in at 19%, a decline from its peak of 25% last summer. According to Coalition Greenwich, the data suggests that this decline is not for lack of trading in credit ETFs, where the ADNV in February was over $9 billion, but instead, a case of the numerator increasing via the bond market’s popularity.

Issuance figures were also positive in February, with $170 billion coming to market, including $156 billion of IG bonds, the highest figures ever for investment grade. The figure is an increase from $167 billion in January and $95 billion last February.