After the Federal Reserve significantly cuts interest rates, American companies are starting a wave of debt issuance.

After the Federal Reserve significantly lowered interest rates last week to reduce borrowing costs, U.S. companies flooded into the bond market on Monday. Including 10 high-rated issuers such as T-Mobile US (TMUS.US), a total of $12.2 billion was raised, following lower than expected issuance last week which led to a rebound in the market. Syndicate trading desks say issuance could reach $20 to $25 billion this week. Additionally, 10 companies borrowed in the junk bond market, making it the busiest day of the year in terms of number of issuers. In the U.S., 18 leveraged loan deals were also launched. Last week, the Fed decided to cut interest rates by 50 basis points, further tightening credit spreads. This provides an opportunity for borrowers to refinance and raise new capital before potential disruptions from profit interruptions, the upcoming U.S. election, or economic data releases. David Schiffman, Chief Portfolio Manager at Aquila Investment Management, stated: "With the uncertainty of the Fed decision now removed and investors still having liquidity to deploy, issuers seem eager to get deals done. With the election nearing, liquidity becomes more challenging, and companies don't want to be left out of the market." After the Fed's rate cut, average yields in the U.S. investment-grade and high-yield bond markets have decreased, making them more attractive to issuers. Spreads have also tightened. Leveraged loan prices have remained stable over the past week. This month, borrowing costs for junk bonds have decreased. Among the companies entering the junk bond market on Monday are online furniture retailer Wayfair (W.US), seeking to borrow $700 million for refinancing existing bonds. Goldman Sachs Group, Inc. is the lead underwriter for this transaction. Cerdia, a cigarette filter manufacturer, issued $800 million in bonds for refinancing its 2027 notes and funding shareholder distributions. Meanwhile, coal producer Coronado is issuing $400 million in bonds to redeem its 2026 notes. Telecom operator Windstream Holdings (WINMQ.US) is tapping into the loan and bond markets. The company launched a $1.3 billion debt plan on Monday to refinance existing loans, led by JPMorgan. While most transactions in the loan market this year have been repricings or refinancings of existing debt, leveraged buyout financing deals are also increasing. Agco Grain & Protein was marketing a $400 million issuance on Monday to fund its acquisition of American Industrial Partners.