Companies Bet on Fed Rate Cuts With Short-Term Debt Sales

Blue-chip companies are increasingly borrowing shorter term in the US bond market to avoid locking in higher funding costs for years ahead of possible Federal Reserve rate cutting in 2024.

Since November 1, when Fed Chair Jerome Powell signaled the US central bank may be finished tightening, companies have sold $46.6 billion of bonds maturing in 10 years or more, or around 40% of fixed-rate issuance. That compares with 47% of issuance for the first 10 months of the year, and 45% for all of 2022.

It’s an extension of a trend seen for at least the past few ...