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Debt Market Activity Surges as Goldman Sachs Returns with Bond Sale

Goldman Sachs returns to bond market with third sale since March, amid a surge in debt refinancing and Gulf investment expansion.

By Max Weldon

5/15, 12:26 EDT
Blackstone Inc.
Goldman Sachs Group, Inc.
Morgan Stanley
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Key Takeaway

  • Goldman Sachs returns to the bond market with a second investment-grade sale in two months, following a $3 billion debt sale in March.
  • Blackstone and Goldman Sachs Asset Management lead a $900 million loan to Depot Connect International, underscoring competitive refinancing terms.
  • Surge in debt market activity as companies like Staples Inc. capitalize on favorable conditions for refinancing, with high-yield bond sales reaching peaks not seen since 2021.

Goldman Sachs Bond Sale

Goldman Sachs Group Inc. has initiated its second investment-grade bond sale in the past two months, marking a notable return to the bond market after a five-year hiatus. The Goldman Sachs Bank USA unit is offering fixed-to-floating rate and floating-rate notes, with the fixed-to-float tranche potentially yielding 0.9 percentage points over Treasuries. This follows a $3 billion debt sale in March, the first since 2019. The move comes as part of a broader trend where economic data and expectations of Federal Reserve rate cuts have fueled a rally in Treasuries. In April, Goldman Sachs Group capitalized on its strong first-quarter results by selling $5 billion of notes.

Private Loan Refinancing

In a significant refinancing move, Blackstone Inc. and Goldman Sachs Asset Management are leading a consortium providing a direct loan of approximately $900 million to Depot Connect International. This loan, aimed at refinancing more expensive private debt, is set to pay 4.75 percentage points over the Secured Overnight Financing Rate, offering more favorable terms than the company's existing debt. This transaction highlights the competitive landscape among credit providers and the borrower-friendly terms emerging as a result. The loan, arranged by KKR's capital markets team, underscores the active participation of major financial institutions in seeking and securing lucrative refinancing deals.

Surge in Debt Market Activity

The debt market is witnessing a surge in activity, with Business Development Companies (BDCs) and corporates tapping into favorable conditions for refinancing and raising capital. Morgan Stanley Direct Lending Fund and Blue Owl Credit Income Corp. are among the BDCs seeking to raise substantial funds through the debt market, aiming for $350 million and $500 million, respectively. This reflects a strategic shift towards leveraging current market conditions to enhance liquidity and support operations. Additionally, Staples Inc. is leading a corporate debt refinancing wave with a $1.8 billion leveraged loan sale, part of a broader trend that saw the highest sales of high-yield bonds since 2021.

Gulf Investment Expansion

Goldman Sachs and Blue Owl Capital are expanding their investment activities in the Gulf, with significant initiatives including a partnership with Mubadala Investment Co. for private credit offerings in Asia and a $1 billion investment commitment. These efforts are aimed at increasing the presence of Middle Eastern companies in the global investment landscape and capitalizing on the favorable risk-reward conditions in the region. The strategic hires and partnerships in Abu Dhabi and Dubai are indicative of a focused approach to enhance on-the-ground capabilities and foster regional partnerships.