At least 28 investment-grade bonds are slated to price today, as dealmakers return to work after the long Labor Day weekend.
The week after the holiday is on average the busiest in volume terms of the year, “by a significant margin,” BMO said in a report today. Syndicate desks are forecasting more than US$50bn for the week. The estimate is below the average of US$61.1bn of new issuance for the four-day period since 2016, BMO said, although with elections in November there is a chance volume might exceed expectations this year.
“IG market participants have been talking all year about the impact of the US Presidential election incentivizing borrowers to front-load issuance plans,” BMO said.
“Perhaps this week is when we finally start to see evidence of that. Otherwise, given the relatively light projection for this week and this year’s trend of heavier-than-anticipated issuance, the risk to this week’s projection seems decidedly skewed toward the upside.”
The high-yield bond market, meanwhile, is expected to welcome at least three offerings today, with a few others announced for pricing later in the week.
The S&P 500 and Nasdaq Composite indexes were down this morning in early trading, while the yield on the 10-year US Treasury was quoted at 3.84%, down a few basis points from Friday’s close.
The average IG bond spread widened 1bp to 96bp on Monday, and the HY bond spread increased 4bp to 317bp, according to ICE BofA data.
Today’s flood of offerings follows a quiet final week of August. Last week’s US$2.05bn of volume brought investment-grade issuance to US$107.495bn for the month, IFR data show. Volume this year of US$1.127trn exceeds the US$873.694bn of bonds priced during the same period last year.
HIGH GRADE
At least 28 US high-grade bond deals are expected to price on Tuesday, getting the week off to a busy start.
Yankee FIG issuance is a large component of today's supply slate. From LatAm, Banco de Credito del Peru and BBVA Mexico are raising funds. Toronto-Dominion Bank, Barclays, Santander, Bank of Montreal, Nordea, UBS Group and SuMi Trust are the other non-US banks issuing in dollars today.
BNP Paribas is marketing a perpetual non-call 10 Additional Tier 1 capital note, offering some diversity of supply beyond today's plain-vanilla senior bond sales.
Aviation leasing company AerCap, pharmaceutical company Roche Holdings, Japanese asset manager Orix and French oil company TotalEnergies are also selling Yankee bonds.
Investors will have their choice of carmaker paper. Deals are coming from American Honda Finance, General Motors Financial and Ford Motor Credit.
Domestic borrowers FirstEnergy Transmission, Southern Co Gas, NiSource, Mastercard, Fifth Third Bancorp, Regions Financial, Columbia Pipelines, Pacific Gas and Electric, PECO Energy, Target and John Deere Capital are raising funds in the US bond market.
LEVERAGE/HIGH YIELD
The primary market for US high-yield bonds is up and running as some of the asset class’s better-known names emerge in the post-Labor Day rush to market.
Restaurant Brands is returning with a US$500m five-year non-call two offering. The fast food holding company, whose subsidiaries include Burger King and Popeyes, is using proceeds to redeem first-lien notes due in 2025.
Norwegian Cruise Line has also set initial price thoughts of 6.25%-6.50% on a US$315m 5.5-year non-call 2.5 issue to refinance outstanding 2024 notes.
MGM Resorts is marketing a US$675m five-year non-call two unsecured bond to refinance debt.
All three borrowers are expected to price their deals today.
TransDigm is back in the market with a US$1.5bn eight-year non-call three offering ahead of pricing on Thursday. The frequent issuer is using proceeds from the bond and a term loan to fund dividend payments.
Gulfport Energy, meanwhile, has announced a US$500m five-year non-call two deal ahead of expected pricing on Wednesday.
The exploration and production company is talking 7% area on the new bond and will use proceeds to fund a tender for its outstanding 8% 2026 bonds.
The Manitowoc Company is also approaching investors with a US$300m seven-year non-call three issue that is expected to price on Thursday. The crane manufacturer is using proceeds to redeem notes maturing in 2026.
STRUCTURED FINANCE
The asset-backed primary will ramp up today as dealmakers resume marketing activity for an expected busy calendar in September.
Roark Capital's Subway mandated a group of banks to arrange a US$2.34bn whole business securitization, which is the sandwich chain's second-ever syndicated offering in the ABS market following its record-setting US$3.35bn deal that it sold in May.
There are at least 11 issuers coming to market in the coming days, according to Securities and Exchange Commission 15G filings.
The auto sector is raring to go with Toyota, Carvana, Lendbuzz and Prestige readying deals. The consumer loan area will be active too, with offerings from Affirm and Foundation Finance. The equipment space, meanwhile, will feature supply from Deere and Volvo.
Elsewhere, the esoteric segment will be busy with new issues from cell tower operator SBA Communications, aircraft lessor Business Jet Capital and timeshare lender Accelerated Assets.
The wave of asset-backed deals comes after a muted August when issuers priced US$16.9bn of deals, down from the US$23.4bn of supply sold in August 2023, IFR data show.
LATAM
The primary market for LatAm issuers is off to a busy start with at least four borrowers expected to price US dollar bond deals today.
Uruguay is talking US Treasuries plus 145bp area on a new 36-year global bond offering as it looks to raise funding to buyback bonds maturing 2025, 2027 and 2031.
BBVA Mexico is approaching investors with a US$500m five-year bond after leads set initial price thoughts at US Treasuries plus 205bp area.
Petrobras is also in the market with a long 10-year senior unsecured note with IPTs set at 6.5% area.
Finally, Banco de Credito del Peru has announced a 10.5-year non-call 5.5 subordinated Tier 2 note, with IPTs at 6.1% area.
Development bank CAF is also readying pricing tomorrow for a US$1bn no-grow 2028 bond after setting IPTs at SOFR mid-swaps plus 90bp area.
On Friday, Moody's assigned a Caa3 rating to senior unsecured notes to be issued by Argentine oil producer YPF. Two other Argentine corporations, Edenor and Pampa Energia, are also expected to price bond deals this month.
EQUITIES
Jazz Pharmaceuticals launched an US$850m CB sale early Tuesday, marking the start of what looks like a promising post-Labor Day window for equity issuance.
Bank of America and JP Morgan are marketing the cancer and neuroscience-focused drug maker’s six-year security on Tuesday with a 3.125%-3.625% coupon and 37.5%-42.5% conversion premium for pricing after the close.
Jazz is using the proceeds in part to prepay US$350m of a 4.375% term loan due in 2029 and to buy back US$150m of its own stock.
The CB was the only new offering to launch early Tuesday and comes after several slow weeks as investors took their traditional summer holidays. Even so, ECM activity (especially follow-on activity) should pick up later this week given stocks are trading near-record highs and volatility has dropped after the gyrations of early August.
Still, IPO activity in the final four months of the year is expected to be slower than normal.
While the same window last year brought large high-profile IPOs from chip designer Arm, grocery app Instacart and software firm Klaviyo, the current pipeline is lacking big names ready to launch in the next few weeks.
Bankers note that given long lead times, many IPO hopefuls have already decided to wait until 2025 rather than clash with potential risks associated with US election and geopolitical uncertainty.
Several energy and life sciences companies have recently filed for IPOs that could launch over the next week or so, though most are likely to be relatively small offerings.