By Kristin Broughton
Companies are breaking up some of this year's biggest bond offerings into bite-size pieces for the debt market to digest.
Businesses this year have issued a record amount of debt to fund digital infrastructure, acquisitions and refinancing. To make their jumbo deals palatable to the most possible investors, big companies are splitting up their deals into more pieces than ever before.
The average number of tranches per deal on U.S. investment-grade deals is at an all-time high of 3.3, according to the London Stock Exchange Group. Amazon.com's $37 billion U.S. issuance this month featured 11 tranches, with maturities ranging from two to 50 years. Honeywell International's aerospace unit issued $16 billion broken up into nine tranches, while Oracle, Abbott Laboratories and Salesforce each split their deals into eight parts.
"It really comes down to meeting investors where they are. Different investors have different needs," said Tony Masone, Amazon's treasurer.
Slicing up bond deals has an added benefit: Companies typically have more pricing power if the deal is split up into more segments, meaning they can shave off interest costs on the transaction, bankers said. And it spreads out a company's refinancing needs over time.
So far this year, U.S. investment-grade companies have issued $632.3 billion in debt, up 18% from the same period a year earlier, and the fastest start to a year on record, according to Dealogic. Tech companies, in particular, are issuing debt to fund significant investments in infrastructure to power artificial intelligence.
"It speaks to the sheer explosion of supply that we're seeing in the investment-grade space right now," said John Sales, head of investment-grade syndicate in the Americas at Goldman Sachs. The average number of tranches has risen over the years alongside larger average deal sizes, bankers said.
To sell a massive amount of debt, a company needs to tap in to demand from investors in different pockets of the investment-grade market who have varying mandates and price sensitivities. Insurance companies and pension funds, for instance, scoop up long-dated bonds, picking up additional yield and matching long-dated liabilities on their books. Other types of investors -- such as bond funds, for instance -- focus on the short end. And some want floating-rate rather than fixed-rate debt.
Some of this year's biggest deals so far included maturities dated well into the future. Amazon's U.S. bond offering included notes due in 2076. Oracle, Honeywell, Salesforce and Abbott Labs included 40-year tranches in their bond offerings.
"You need to spread the field as far as you can," said Maureen O'Connor, global head of high-grade debt syndicate at Wells Fargo.
With more tranches, companies also have more options to make the deal math work in their favor. That's because it gives bankers, responsible for pricing a transaction, more flexibility to ratchet down the credit spread -- the amount a company pays above a benchmark -- on each segment.
Bankers start with a preliminary price on a deal and work on lowering it from there as they get information on investors' price sensitivities. The smaller the tranche, the more likely they can land on a tighter credit spread because they're not setting the price to attract a marginal investor.
Such flexibility can translate into meaningful savings on highly rated deals, particularly for companies whose primary objective is to minimize interest costs, according to John Servidea, global co-head of investment-grade finance at JPMorgan Chase. "At the end of the day, that's often what we're fine-tuning," he said.
Write to Kristin Broughton at Kristin.Broughton@wsj.com
(END) Dow Jones Newswires
March 19, 2026 06:00 ET (10:00 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
