No issuance is expected in the US investment-grade and high-yield markets on Friday as investment banks across the Street get ready for a deluge of issuance after Labor Day next week.
Syndicate forecasts are calling for more than US$50bn of high-grade volume during the four-day week, including 20-deal days, as buy and sell-side professionals return to their desks following the typical summer lull.
Friday's main economic data releases are July personal income and outlays, the August Chicago Business Barometer, and the University of Michigan's revised August survey of consumers.
Today would be the third day in a row with no US high-grade bond issuance, according to IFR data. On Tuesday, two issuers raised a combined US$2.05bn, bringing August investment-grade issuance to US$107.495bn. Volume this year of US$1.127trn exceeds the US$873.694bn of bonds priced during the same period last year, the data show.
The S&P 500 and Nasdaq Composite indexes were up this morning in early trading, while the yield on the 10-year US Treasury was quoted at 3.87%, about even with yesterday's close.
The average investment-grade bond spread was unchanged at 96bp for the fifth day in a row on Thursday, and the high-yield bond spread came in 4bp to 315bp, according to ICE BofA data.
For the week ended August 28, Lipper US Fund Flows reported that the all short-intermediate investment-grade debt funds/ETFs net inflow was US$1.762bn and the all corporate high-yield debt funds/ETFs net inflow was US$1.302bn. The all domestic equity funds/ETFs net outflow was US$709.2m and the all non-domestic equity funds/ETFs net outflow was US$888m.
HIGH GRADE
The high-grade primaries are experiencing yet another no-deal day as the summer break comes to an end.
In the secondary market, some of the most traded bonds this week came from the US$10.5bn deal that Kroger issued earlier this month to fund its acquisition of grocery chain Albertsons.
This morning, Kroger's 4.9% 2031 was changing hands as tight as 83bp over US Treasuries after pricing at a spread of 117bp, according to MarketAxess data.
Its 5% 2034, meanwhile, traded yesterday afternoon as tight as 98bp over. That bond priced at 122bp over.
LEVERAGE/HIGH YIELD
It is another quiet day in the primaries for high-yield bonds ahead of what is likely to be a busy post-Labor Day session next week.
In the secondary market, the 7.35% 2041 issued by Transocean is enjoying some activity as it gives up some gains to trade at 94.25 after hitting 95.125 earlier this morning, according to MarketAxess data.
The 10.25% 2031s issued by Geo Group are also changing hands today to trade at a dollar price of 106.25, virtually flat to yesterday's levels. The bond has rallied substantially since the private prison company priced it at par in April.
STRUCTURED FINANCE
No asset-backed deals are expected to price today, wrapping up a moderate supply month for the ABS primary.
ABS issuers have raised US$16.94bn in August, down from US$23.37bn during the same month last year, IFR data show.
Deals across different asset classes will resume after the Labor Day holiday.
Yesterday auto lenders Lendbuzz and Prestige, equipment maker Deere and plane lessor Business Jet filed with the Securities and Exchange Commission for new ABS offerings.
LATAM
Argentine electricity distributor Edenor has mandated Bank of America, BTG Pactual, Credit Agricole and UBS to arrange calls with fixed-income investors for a potential dollar-denominated senior unsecured 144A/Reg S bond offering.
Virtual calls commence today. In-person calls will be held in London, New York and Boston September 2–9.
S&P assigned a CCC rating yesterday to a planned issue of seven-year senior unsecured notes for up to US$400m.
Meanwhile, Argentine oil and gas producer YPF yesterday launched an offer to buy back up to US$500m of its outstanding US$1.13bn 8.5% senior notes due 2025 and US$809m 6.95% senior notes due 2027.
Also on Thursday, S&P upgraded Eletrobras to BB from BB- on improved metrics.
Latin American sovereign five-year CDS widened 2bp for Mexico and Colombia yesterday, while moving little elsewhere in the region, according to Lucror Analytics.
EQUITIES
Aside from two SPACs combining for US$350m this week, the US ECM activity was quiet this week with no deals priced heading into the Labor Day weekend.
Bankers are optimistic about reviving follow-on and convertible bond issuance soon after the break, with IPOs resuming in the week of September 9.
Issuers will be navigating a tricky calendar in the months ahead, one reason why many IPO aspirants have already deferred their plans until next year.
The next US Federal Reserve Meeting concludes on September 18 followed by religious holidays and Columbus Day in October and the US presidential elections in November, potentially disrupting lengthy market schedules.