Long-dated corporate bond issuance has cratered to its lowest share since 2020, creating a supply-demand mismatch that's compressing credit spreads to levels not seen since 1998.
There’s a classic economic tension playing out in the US investment-grade bond market right now, and it boils down to this: buyers are lining up for something sellers don’t want to offer.
Long-dated corporate bonds, those with maturities stretching beyond 30 years, have become the hottest ticket in fixed income. But issuance of these instruments has collapsed. As of mid-September 2026, long-dated bond sales made up just 5% of all corporate issuance during the first half of the month. That’s the lowest proportion since at least 2020.
A $14.7 billion appetite meets a closed kitchen
The demand side of this equation is almost comically lopsided. When Aon Inc. recently brought its 2056 notes to market, the deal attracted $2 billion in orders, oversubscribed by more than seven times.
Eli Lilly previously drew $14.7 billion in orders for just $2 billion worth of 30- and 40-year bonds. Oversubscription ratios for long-dated deals are averaging around 5x, the highest since 2021.
The buyers driving this frenzy are pension funds and insurance companies, institutions that hold long-term liabilities and need matching assets to keep their books balanced. These institutional investors are also chasing yields north of 5.5%, a threshold that long-dated corporate debt can still clear in the current rate environment.
Why companies are keeping it short
Bonds with maturities of 30 years or more accounted for only 11% of high-grade corporate sales, down from 15% a year earlier. Meanwhile, 3- to 10-year maturities now represent 60% of all bond issuance, up from 51% the prior year.
Total issuance of long-dated corporate bonds fell to less than half of the volumes recorded a year earlier by mid-September.
Spreads compressed to a 28-year low
Investment-grade credit spreads have tightened to 0.73 percentage points over Treasuries. That’s the narrowest gap since 1998, a period when the US economy was riding the dot-com boom and corporate balance sheets were flush with cash.
Credit spreads measure the extra yield investors demand to hold corporate bonds instead of risk-free government debt. When spreads compress this aggressively, it signals that investors are so eager for corporate paper that they’re accepting less compensation for the additional credit risk.
