At least 18 IG issuers are slated to price deals today, after borrowers flooded the market on Tuesday with 29 deals – the most ever in a single day.
Borrowers easily exceeded the previous record of 23 deals set on September 3 2019 and then repeated on September 7 2021, according to IFR data. The US$44.275bn of bonds that priced yesterday puts the market within striking distance of the US$50bn-$60bn syndicate estimates for the week.
In volume terms, Tuesday was the third largest session in the US high-grade market, behind the US$51.5bn of bonds that priced on September 11 2013 and US$48.75bn on January 13 2016. Unlike the two largest sessions on record, Tuesday’s haul did not include any jumbo trades (the biggest was a US$4.5bn deal from Barclays).
“After the dizzying start to the week, IG supply is certain to surpass expectations for around $50bn in issuance this week with another active session on tap today with four borrowers announcing a deal overnight and double digit borrowers reported to be considering a deal amid somewhat tepid risk tone this morning,” BMO said in a report today.
Yesterday the average investment-grade new issue concession was 4.28bp and the average order book was 3.47x subscribed, while the average price progression was 28.42bp tighter, IFR data show.
Tuesday's deals brought 2024 high-grade volume to US$1.172trn versus US$874.694bn for the same period last year, the data show.
Meanwhile, in high-yield two deals are slated to price today, after four issuers raised a combined US$2.315bn on Tuesday.
The average IG bond spread widened 2bp to 98bp on Tuesday, and the HY bond spread gapped out 14bp to 331bp, according to ICE BofA data.
Economic data releases on the docket today include the July international trade report, July factory orders and the July Job Openings and Labor Turnover Survey.
The S&P 500 index was trading modestly higher this morning, while the yield on the 10-year US Treasury was quoted at 3.79%, down about 5bp from Tuesday's close.
HIGH GRADE
The US investment-grade bond market is set for another packed session of supply. At least 18 offerings are expected to price today.
Ride-hailing company Uber Technologies is issuing five, 10 and 30-year senior unsecured notes to refinance its outstanding loans and high-yield bonds.
Insurer CNO Financial is issuing a five-year funding agreement-backed note. And medical technology company Stryker is marketing five and 10-year senior unsecured bonds.
Software companies Cadence Design Systems and Automatic Data Processing are issuing senior unsecured notes. Adhesive maker Nordson is printing a five-year bond.
Consumer electronics company Agilent Technologies is issuing a two-part bond to help fund its acquisition of drugmaker Biovectra.
Californian utility Sempra is looking to land a corporate hybrid in the form of a 30-year non-call 10 note, and utilities Interstate Power and Light and Southern Company are also issuing fresh paper.
From Japan, insurer Meiji Yasuda Life and auto parts maker Denso Corporation are bringing deals. Meanwhile, UK bank HSBC is selling today an Additional Tier 1 capital note, after French bank BNP Paribas printed a US$1bn perpetual non-call 10 note on Tuesday.
More Yankee offerings are expected from Canadian Imperial Bank of Commerce, Santander UK plc, Deutsche Bank, Bank of Nova Scotia and Credit Agricole.
LEVERAGE/HIGH YIELD
Two junk-rated borrowers are readying bond pricings on Wednesday as activity in the primary market picks up after the summer lull.
Performance Food Group is leading the way with a US$1bn eight-year non-call three offering to help the food distributor finance its US$2.1bn acquisition of Cheney Brothers.
Crescent Energy has also set initial price thoughts of 100.25-101.25 on a US$250m add-on to its 7.375% 2033 as the borrower looks to repay a portion of its revolving credit facility.
The bonds were trading on Tuesday at 102.26 to yield 6.815%, according to MarketAxess data.
STRUCTURED FINANCE
A US$2.3bn whole business securitization from sandwich chain Subway is leading the way as a string of issuers prepare to print asset-backed deals over the next week or so.
In the consumer loan sector, Affirm is preparing a US$500m point-of-sale deal, while Foundation Finance is readying a US$342.3m issue backed by home-improvement loans.
In the credit card space, Avant is back with a US$450m offering, marking the fintech's first such offering since 2021.
As for the aviation sector, BBAM is seeking to price its first securitized bond since 2019 as the aircraft leasing firm looks to raise US$556m.
In the RMBS sector, Annaly yesterday released price guidance on its US$519.9m non-QM offering. The US$411.2m Triple A rated two-year tranche has guidance of US Treasuries plus 130bp-135bp.
LATAM
Eletrobras is the latest borrower to join a growing pipeline of LatAm issuers this week after the Brazilian utility announced roadshows for a long 10-year dollar bond.
Meanwhile, development bank CAF and Argentine oil producer YPF are expected to price dollar bonds today.
Order books on CAF's US$1bn long three-year bond grew to around US$10.75bn earlier today. The spread has been set at 80bp over mid-swaps.
YPF has set IPTs of low 9% on a seven-year dollar bond.
This comes after Uruguay, BBVA Mexico, Petrobras and Banco de Credito del Peru raised a combined US$3.45bn on Tuesday.
Elsewhere, Sociedad Quimica y Minera de Chile has announced that it is readying a senior unsecured bond offering, which Moody's has rated Baa1.
Fitch has also assigned a CCC+ rating for an up to US$400m unsecured note from Argentine electric distribution company Edenor.
EQUITIES
US ECM syndicate desks wasted no time tapping the new funding window by bringing a spate of equity issuance late Tuesday, even after an ugly stock sell-off driven by concerns about the strength of the US economy.
Following a session in which the S&P 500 fell 2.1% in its worst day since early August and ahead of a 4.2% slide in Japanese stocks overnight, two REITs, Independence Realty Trust (US$198m) and Starwood Property Trust (US$345m), both priced primary stock sales.
Jazz Pharmaceuticals also raised US$850m from a six-year convertible bond that will allow the Irish-domiciled drug company to lower its borrowing costs and buy back stock.
After one day of marketing, Bank of America and JP Morgan priced the drugmaker's CB at a coupon of 3.125% and a conversion premium of 40% versus the earlier price talk of 3.125%-3.625% and 37.5%-42.5%.
Jazz shares closed Tuesday at US$109.32, setting the conversion price at US$153.05.
Elsewhere, Vaxcyte is exploiting investor interest in its pneumonia vaccine to raise another US$1bn from a follow-on stock sale, even though it is already flush with cash.
Bank of America and six other banks are marketing the later-stage biotech’s fixed size-offering for one day through Wednesday for pricing after the close.
Vaxcyte shares soared 36.4% to US$110.15 on Tuesday following the release of promising Phase II trial results for its vaccine candidate.
The proceeds would add to US$1.9bn of cash Vaxcyte already held at the end of June, including US$700m from a follow-on offering priced at US$64 a share in January.
Bankers also brought two of this year’s best-performing IPOs back to market late Tuesday. Certification firm UL Solutions and nursing home operator PACS, which went public on consecutive days in April, each launched their first follow-ons, both two-day marketed offerings that are scheduled for pricing late Thursday.