(Rpeats story from May 11, no changes)

By Matt Tracy and Gertrude Chavez-Dreyfuss

WASHINGTON/NEW YORK, May 11 (Reuters) - Companies

flooded the U.S. corporate bond market with $18 billion in new

paper on Monday, the biggest issuance since Meta's jumbo bond

sale on April 30, setting the stage for what analysts expect

will be the busiest May for issuance in six years.

Twelve investment-grade issuers tapped the U.S. bond market,

according to market participants, including U.S. wireless

carrier Verizon Communications ( VZ ) and Japanese automaker Toyota ( TM ).

The day's sales follow $64 billion total in the last week of

April. Corporate bond issuance last week was $39 billion, down

from about $47 billion in the first week of May 2025.

The daily surge in issuance follows the heaviest April since

2020, when companies scrambled for cash to survive the initial

pandemic shutdown, BofA Global analysts said in a May 1 report.

Investment-grade deal volume totaled $196 billion last month,

the analysts noted.

So-called "hyperscalers" such as Alphabet and Meta

Platforms ( META ) have emerged as a dominant force in primary

markets this year, as they borrow to build artificial

intelligence infrastructure. They have issued roughly $110

billion of bonds so far in 2026, supporting a further $20

billion in data center financing. Together, that represents

about 15.5% of total investment-grade issuance, up from just 3%

a year ago, according to Nathaniel Rosenbaum, head of U.S.

high-grade credit strategy at J.P. Morgan.

The firms are "punching way above their weight in terms of

expanding their debt footprint," said Rosenbaum. "By the end of

this year, we think tech could easily be larger than the U.S.

banks sector-wise."

Banks have traditionally dominated U.S. bond issuance,

reflecting their structural reliance on wholesale funding

markets. But the rapid rise in tech borrowing is beginning to

change that longstanding dynamic.

Alphabet, the parent of Google, tapped the euro and Canadian

bond markets last week for €9 billion and C$8.5 billion in debt.

Meta, the latest hyperscaler to tap the U.S. bond market, sold a

$25 billion six-part series of bonds on April 30.

Hyperscalers are well-positioned to issue $250 billion in public

market bonds this year, according to Meghan Robson, head of U.S.

credit strategy at BNP Paribas. In effect, companies are

choosing to lock in funding while investor demand remains

resilient and before a potential repricing of risk is reflected

in higher base rates or wider spreads, according to analysts.

That calculus is particularly relevant if energy-driven

inflation pressures keep central banks on hold or delay any

easing cycle, they said.

All told, Robson forecasts $185 billion in May IG bond

issuance and $1.85 trillion for 2026, which would be an annual

record. In addition to AI-related deals, opportunistic

deal-making has also contributed to this year's volume, she

noted.

"There has been more opportunistic issuance this year than

we would have expected," Robson said.

Google and Meta did not immediately respond to requests for

comment.

The late spring rush comes amid inflation concerns as the

prolonged U.S.-Israel/Iran conflict and the closure of the

Strait of Hormuz have resulted in elevated oil prices, which in

turn has driven up bond yields and lifted borrowing costs.

For issuers, however, the decision to accelerate supply

reflects a tactical trade-off. While all-in yields are elevated,

credit spreads - the premium companies pay over Treasuries-

remain relatively tight, preserving attractive financing

conditions on a historical basis.

Spreads between corporate bonds and Treasuries continue to

reinforce that scenario. Despite the rise in government

borrowing costs, credit spreads have held near historically

tight levels, signaling that investors still view corporate

balance sheets as broadly resilient.

"That divergence suggests markets are treating the most

likely outcome as a mild stagflationary shock, enough to

constrain central banks, but not enough to pose more serious

long-term risks," said Lotfi Karoui, multi-asset credit

strategist at PIMCO, in a note.

The yield on the benchmark 10-year Treasury note

closed on Monday at 4.41%, while the average investment-grade

spread over Treasuries closed Friday at 78 bps, according to the

ICE BofA Corporate Bond Index.