Investors Are Paying the Price as Drugmakers Flood Bond Market
- At $14.5b sector totals 10% of non-financial supply in 2019
- Trump, Democrats’ anger at prices may be weighing on sector
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Drug companies that have rushed to borrow in the bond market this year are finding out that their actions have consequences for investors.
The repercussions can be seen in spreads, the risk premium investors pay above Treasuries to own bonds in the sector. Health care has underperformed the high-grade market this year, narrowing just 19 basis points since January. The Bloomberg Barclays U.S. IG Corporate Bond Index, by contrast, has narrowed by 32 basis points year-to-date.