WASHINGTON, May 1 (Reuters) -

Relentless demand for highly rated debt is helping bring down the premiums U.S. investment-grade rated companies are paying, according to a new research report from investment bank BMO.

Average new issue concessions - the premium that borrowers paid over their existing debt's costs - declined to roughly 2 basis points in April, marking the seventh consecutive month of declining concessions, BMO noted.

The decline was on the back of strong demand for new bonds which were on average just under four times oversubscribed, the highest reading for a month since March 2023, the report said.

New investment-grade bond supply in April totaled $110 billion compared to market projections of $100 billion, continuing this year's theme of higher-than-expected monthly supply.

But this pace of issuance could be slowing. BMO expects May investment-grade bond supply of between $120 billion and $125 billion which is slightly below the historical average supply for May of $134 billion since 2016. (Reporting by Matt Tracy; Editing by Michael Erman)