Venture Global debt deal wakes US junk bond market from tariff slumber

Unlock the Editor’s Digest for free

One of the US’s largest energy exporters was able to borrow through US junk debt markets on Tuesday, the first deal since Donald Trump’s tariff war froze the $1.4tn high-yield bond market.

A subsidiary of liquefied natural gas producer Venture Global raised $2.5bn in the sale, which was closely watched on Wall Street as a test of investor appetite for risky corporate debt, said people briefed on the matter.

It is the first high-yield bond deal since Trump announced his “liberation day” tariffs on April 2, triggering turmoil in global markets. The debt sale was increased from an initial $1.5bn offering as bankers topped up investor orders for a piece of the eight- and 10-year maturing bonds.

Venture Global’s debt raise comes about fourth months after the group went public in January. Its stock has fallen about 65 per cent since its initial public offering.

While the debt deal was a success for the LNG exporter, bankers and investors cautioned that it did not yet signal an all-clear for other borrowers who turn to the critical funding source for capital.

Several investors pointed to the dearth of leveraged loan issuance, which they see as a deeper source of capital for the private equity industry, and the relatively high ratings on Venture Global’s bond sale, which will be used to pay down existing debts.

Investors added that lower-rated borrowers did not yet have a clear path to market, despite calmer trading after heavy selling in early April. Bond and loan funds reported record outflows in the week after Trump’s “liberation day”.

Venture Global’s high-yield deal follows the revival of the investment-grade bond market after large US banks, including Morgan Stanley and JPMorgan Chase, issued fresh debt following their latest earnings announcements. Bankers had been waiting for higher-rated companies to test the waters before primary markets reopened for riskier issuers.

“It does feel like the moves [in high yield] are more pronounced,” one banker said. “If you have a double-B [company] ready to go, markets aren’t shut. But it’s a bit more painful.”

Analysts with credit rating agency S&P Global assigned double-B-plus ratings to Venture Global’s debt, just one notch below investment grade. Moody’s and Fitch were more circumspect, rating the debt double-B.

But the ratings are nonetheless near the top of the junk universe, allowing Venture Global to lock in a yield of about 7.75 per cent on its new 10-year bond.

The LNG exporter’s new offering came alongside the group’s announcement that it was beginning commercial operations at its Calcasieu Pass project, located along Louisiana’s coast on the Gulf of Mexico.

Venture Global declined to comment. Mizuho, which was leading the deal alongside more than a dozen banks on Wall Street, did not respond to requests for comment.