The US investment-grade bond market is facing a supply-demand imbalance as demand for long-dated corporate bonds significantly outstrips supply. As of mid-September 2026, sales of bonds with maturities exceeding 30 years dropped to just 5% of total corporate issuance, marking the lowest level since 2020.
Institutional investors, including pension funds and insurance companies, are driving demand for these long-term instruments to match their liabilities. These buyers are seeking yields exceeding 5.5%. Recent data shows that oversubscription ratios for long-dated deals average around 5x, the highest level recorded since 2021.
A notable example of this trend is Eli Lilly, which received $14.7 billion in orders for a $2 billion offering of 30- and 40-year bonds. Meanwhile, total issuance of long-dated corporate debt has fallen to less than half of the volumes seen a year ago.
The market shift is evident in the composition of high-grade sales: bonds with maturities of 30 years or more now account for 11% of the total, down from 15% a year prior. Conversely, 3- to 10-year maturities have grown to 60% of all issuance, compared to 51% in the previous year.
This scarcity of long-term supply has compressed investment-grade credit spreads to 0.73 percentage points over Treasuries. This is the narrowest margin observed since 1998, indicating that investors are accepting lower compensation for credit risk due to the high demand for corporate debt.
