(Bloomberg) -- Companies are expected to keep borrowing in the U.S. corporate investment-grade bond market next week even as funding costs march higher on rising interest rates and Russia’s invasion of Ukraine.

Wall Street syndicate desks are projecting as much as $25 billion of fresh high-grade supply, a drop from over $37 billion raised this week. Sales for March are poised to surpass the $200 billion mark, breaking it into the top four months on record, according to data compiled by Bloomberg.

The investment-grade market is also anticipating a potential mega-bond deal from Oracle Corp. to help fund its pending $28.3 billion acquisition of medical records provider Cerner Corp., though the timing is uncertain.

Issuance has been accelerating despite the fact that the pandemic-era days of dirt-cheap credit are over and borrowers are having to entice investors with elevated new issue concessions. The outsized outperformance of newly-minted high-grade bonds relative to the secondary market has also faded, according to JPMorgan Chase & Co.

“There is now once again more risk involved in new issues which in turn may moderate demand unless new issue concession increase once again,” JPMorgan credit strategists led by Eric Beinstein and Nathaniel Rosenbaum wrote in a note Friday.

‘Double-Edged Sword’

In the U.S. high-yield market, Apollo Global Management Inc. is preparing to launch a $2 billion offering of secured and unsecured bonds backing its buyout of Novolex Holdings LLC, according to people with knowledge of the matter. The debt financing also includes a $2.6 billion sustainability-linked leveraged loan, which would be the largest ever in the U.S., Bloomberg-compiled data show. 

The junk primary market is having the slowest month in two years, driven by rising inflation concerns, a hawkish Federal Reserve and the war in Ukraine. Meanwhile, funds that buy the bonds have now seen cash exits for 11 straight weeks after $2.7 billion was pulled for the period ended March 23, Refinitiv Lipper data show. 

Bank of America Corp. strategists Oleg Melentyev and Eric Yu lowered their 2022 U.S. junk-bond issuance estimate by $55 billion Friday, calling the absence of issuance a “double-edged sword” that’s helpful in the immediate sense of supporting market technicals.

Only one U.S. leveraged-loan issuer is holding a lender call next week. Specialty chemical company Solenis will conduct outreach on Monday for a $300 million sale marked for debt repayment and general corporate purposes. Commitments on four deals are due, including Houghton Mifflin Harcourt Co.’s $1.5 billion offering that supports Veritas Capital’s buyout of the company.

In the distressed debt market, Hersha Hospitality Trust has covenant waivers on a credit facility set to expire on March 31.

Finally, U.S. holders of Russia’s sovereign and corporate bonds will be keenly following delayed coupon payments and those due next week. An increasing number of payments are getting stuck in a web of financial intermediaries that are struggling to comply with international sanctions against Russian President Vladimir Putin and his allies.

Read more: Russia High-Wire Act to Avoid Default Looks Increasingly Fraught

Click here for a list of bond maturities and coupon deadlines based on Bloomberg’s reporting.

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