The pace of new issuance in the primary corporate bond market is picking up on Tuesday, with at least 10 deals expected in investment grade and six in high yield.
Today’s slate of economic data releases is minimal while market participants prepare for the the hotly anticipated consumer and producer price indexes later this week.
"Supply was expected to be front-loaded this week given inflation data on Wednesday and Thursday," BMO said in a report this morning. "While we will likely get at least some issuance on those days, particularly with the market impact of CPI releases expected to fade to at least some extent going forward, today will have to be large if there will be any chance of hitting weekly expectations for approximately $35bn."
Seven investment-grade borrowers priced bond offerings on Monday, raising a combined US$7.1bn, bringing monthly issuance to US$88.675bn, according to IFR data. High-grade borrowers have printed US$1.216trn of bonds so far this year, compared to the US$932.224bn that priced during the same period last year.
The high-yield market welcomed two bond offerings yesterday, compared to today's six. Issuers raised a total of US$1.45bn on Monday, bringing volume for September to US$9.065bn, the data show.
The average IG bond spread was unchanged for the fourth day in a row at 99bp on Monday, and the HY bond spread tightened 3bp to 336bp, according to ICE BofA data.
Meanwhile, the S&P 500 and Nasdaq Composite indexes are trading up this morning, while the yield on the 10-year US Treasury was quoted around 3.69%, in line with Monday's close.
This morning the CME FedWatch Tool forecasts a 73% probability for a 50bp fed funds rate cut at the September FOMC meeting and a 27% probability for a 25bp reduction.
HIGH GRADE
At least 10 investment-grade bond offerings are expected to price on Tuesday.
Private-credit firm Blue Owl Credit Income is issuing a five-year senior unsecured bond. Air lessor Macquarie AirFinance is marketing a 5.5-year senior bond, with proceeds earmarked for paying down the remaining loan used to complete its acquisition of air lessor ALAFCO.
REIT American Assets Trust has announced a 10-year senior unsecured note offer, while insurer MassMutual is printing a seven-year funding agreement-backed note
There are some acquisition-related financings today, too. Midstream energy company ONEOK is in the market with a six-part bond offering that will back its purchase of midstream assets from alternative asset manager Global Infrastructure Partners.
Oil contract driller Helmerich & Payne is issuing three, five and 10-year senior unsecured notes to help finance its purchase of KCA Deutag. Agribusiness company Bunge is also targeting the same maturities in its three-part bond deal, which will back its acquisition of Canadian grain handler Viterra.
In terms of Yankee offerings, Hong Kong conglomerate CK Hutchison, Australian natural gas infrastructure company APA Infrastructure and the financing vehicle for Japanese carmaker Nissan are all preparing deal pricings today
LEVERAGE/HIGH YIELD
Activity in the high-yield bond market continues at a steady pace in what looks likely to be a busy week for the asset class as six issuers seek to raise US$3.4bn today.
On the pricing roster today are rental car company Avis with a US$500m five-year non-call two offering and Wynn Resorts with an US$800m 8.5-year non-call three issue.
Verizon retailer Victra, wealth management company Focus Financial, EquipmentShare.com and Phinia, a manufacturer of vehicle components, are also expected to land deals today.
Elsewhere, HAH Group, a provider of home care and support for the elderly, has also announced a US$600m seven-year non-call three deal, which is expected price next week.
STRUCTURED FINANCE
The asset-backed primary is busy with at least 11 more deals slated for sale this week.
Heavy equipment maker Deere, auto finance firm LendBuzz and cell tower operator SBA Communications yesterday released price guidance on their latest offerings.
This comes after three ABS issuers - Verizon, Santander and Foundation Finance - printed more than US$3bn of supply on Monday.
The RMBS sector is also seeing a surge in activity after Apollo, Rithm and Figure Technologies all printed deals yesterday.
Other forthcoming deals include a US$320.6m non-QM securitization from MFA Financial and a US$658.3m seasoned CRT issue from Freddie Mac.
LATAM
Two energy-related borrowers are looking to price bonds in the LatAm primaries today.
Fiemex Energia, a newly formed entity holding energy assets in Mexico, has set initial price thoughts of 7.625% area on US$1.49bn 16.4-year bond with a 12.9-year weighted average life.
Proceeds are going to pay down bridge financing used for the acquisition of the assets.
Argentine electric utility Edenor, meanwhile, is also expected to price today a seven-year amortizing bond after leads released IPTs of low 11% area on the deal.
EQUITIES
US ECM syndicate desks rushing to take advantage of the post-earnings funding window have already launched or priced 11 offerings for nearly US$4.6bn of proceeds.
A part of billionaire Brad Jacobs’ logistics empire, trucking company RXO, raised an upsized US$500m from a follow-on stock sale to help fund its previously announced US$1.03bn purchase of Coyote Logistics from United Parcel Service.
After a day of marketing on Monday, Goldman Sachs, Bank of America, Citigroup and Morgan Stanley priced 19.2m RXO shares at US$26.00 or a 2.7% file-to-offer discount.
RXO shares rose 1.9% to US$27.23 while the offering was marketed, underpinning an upsize from the US$350m fixed target at launch.
Elsewhere, Ionis Pharmaceuticals firmed up its cash position by raising US$500m from a wall-crossed overnight stock sale.
Morgan Stanley and Goldman Sachs led the sale of 11.5m shares in the RNA gene therapy specialist at US$43.50, a 10% discount to Monday’s closing price of US$48.33.
Ionis is using the proceeds to cover an expected US$400m cash burn in the second half of this year, as well as pre-fund US$44m of an out-of-the money CB maturing in December.
Sponsors are also beginning to step forward as well.
Private equity firm EQT harvested US$152.5m of its Kodiak Gas Services holding via an overnight stock sale, while private markets asset manager StepStone raised US$205m from a block trade to repurchase stock from its management and staff.
Robust ECM activity is expected Tuesday night with a US$1.35m three-year mandatory CB from Hewlett Packard Enterprise and a pair of biotech follow-ons from Relay Therapeutics (US$200m) and Terns Pharmaceuticals (US$125m).
Viking is also starting the first of two days of marketing to price a US$973m first-time follow-on.
The offering comes just four months after the luxury cruise ship operator’s US$1.8bn NYSE IPO, allowing sponsors TPG and Canada Pension Plan to take early profits.