Trading volumes of US corporate debt hit a record level on Tuesday.

More than $38bn worth of investment grade, high yield and convertible bonds swapped hands on Tuesday, surpassing a high water market set last March, as $17bn of new Microsoft bonds began trading in the open market, reports Eric Platt in New York.

The surge in trading follows a near record month of borrowing by companies through US capital markets. Banks and companies that hold investment grade credit ratings sold $177.9bn of debt in the US in January, the second highest monthly tally on record and less than $3bn below a peak set in May 2016, according to Dealogic.

“There is a lot of secondary demand…and we are busy,” said Andrew Brenner, head of international fixed income at National Alliance.

“You had a tremendous amount of issuance and the Treasury market is looking at a number of dynamics, from the Fed, changes at the Treasury under the new administration and the effects of the [upcoming] European elections. But US corporates are doing very well.”

Trading on Tuesday was dominated by Microsoft, which sold $17bn of debt a day earlier. Five of the seven most traded corporate bonds on Tuesday were from the US technology group, according to MarketAxess.

AT&T, which capped the month with a $10bn debt offering on Tuesday, surged to the top of investor screens on Wednesday, as the new bonds began trading. Despite the flurry of issuance, spreads — the premium investors demand to hold the bonds compared to benchmark US Treasuries — were little changed from the end of December, indicating the debt was well received by investors.

“Although spreads probably widened a bit today they should still end tighter for the month, which is quite impressive given supply volumes and owes to a positive tone in the equity market…, a 2.55 per cent decline in the dollar and sizable inflows both to bond funds [and] ETFs and from foreign investors,” said Hans Mikkelsen, a credit strategist with Bank of America Merrill Lynch.

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