The US investment-grade primary expects six offerings today ahead of the Federal Reserve's FOMC meeting starting tomorrow with the rate announcement on Wednesday.
Markets are now eyeing a 50bp rate cut instead of a 25bp reduction in the wake of last week's CPI report.
"Sentiment is neutral at the beginning of FOMC week after the odds of a 50bp rate cut re-surged over the past few sessions, with traders now pricing in a greater than 50% chance for such a move on Wednesday," BMO said in a report today.
As for the business of deals, BMO said that for the week ahead, market participants are projecting US$22bn-$23bn of IG offerings with a large chunk of that expected to come today given the Fed meeting.
In high-yield, Royal Caribbean Cruises is sailing into the market today with an offering.
On the data front for the week, aside from the Fed meeting, a busy menu of economic reports is slated for release.
Last week, the IG primary saw US$38.225bn from 23 deals priced, with the average new issue concession of 3.76bp and average order book of 3.43x, according to IFR data. The average move from initial price thoughts to pricing for those offerings was 22.467bp tighter.
In the HY primary last week, 18 tranches were priced totaling US$12.49bn, lifting September volume to 29 tranches totaling US$20.105bn, according to IFR.
As for secondary credit spreads, high grade spreads closed Friday and last week as a whole unchanged or a basis point narrower as risk tone improved over the course of the week, BMO said.
HIGH GRADE
The US investment-grade market is expected to draw a handful of new offerings at the start of the week. At least three deals are expected to price today.
Swiss pharmaceutical company Novartis is selling a four-part senior unsecured note in US dollars, returning to the market after its last deal in 2020. The issuer is selling five, seven, 10 and 30-year maturities.
Freight railroad company CSX is issuing a 30-year senior bond. Healthcare company Laboratory Corp of America is in the market with a three-part senior unsecured bond, earmarked for refinancing its near-term bond maturities and loan debt.
LEVERAGE/HIGH YIELD
Royal Caribbean Cruises is headlining in the junk bond market on Monday as it prepares to return with its third deal this year.
This time the cruise line operator is coming with a US$1bn seven-year non-call three offering ahead of expected pricing today. Proceeds are going to pay down debt.
Meanwhile, AltaGas, which has high-grade corporate ratings, is out with an offering of 30-year non-call 10 junior subordinated notes that are expected to be rated BB/BB+ by S&P and Fitch.
Leads have set initial price talk of 7.50%-7.625% on the bond, whose fixed-rated coupon will be reset in 2034. The energy infrastructure company is using proceeds to repay debt.
Also on the pricing roster for this week is healthcare services company HAH Group, which is marketing a US$600m seven-year non-call three to refinance debt and pay a distribution to shareholders.
STRUCTURED FINANCE
Another busy supply week is expected for the asset-backed primary after more than US$11bn of issuance was absorbed last week.
This morning, seven offerings were announced with three deals coming from the auto sector: a US$1.29bn prime issue from Ford, a US$1.2bn subprime trade from Santander and a US$797.75m lease securitization from Mercedes-Benz.
In the equipment sector, CNH is preparing to raise US$906.4m with its third issue of the year, while Clarus Capital is on track to bring in US$215.2m with its ABS debut.
In the esoteric space, Sunrun is seeking to price a US$365.4m solar lease deal, while Landmark Dividend is readying a US$265m data center securitization.
LATAM
The Latin American primary is quiet today as the region awaits Federal Reserve interest rate announcement on Wednesday.
Gran Tierra Energy announced on Friday that it priced US$150m of additional 9.5% senior secured amortizing notes due 2029 in a private placement.
Peru's ministry of finance announced on Saturday that it approved an urgent aid package for ailing state-owned oil company Petroperu.
EQUITIES
Natural gas producer BKV kept the post-Labor Day pricing window open by launching a US$315m NYSE IPO early Monday.
Citigroup and Barclays are leading the sale of 15m shares in the Barnett and Marcellus shale operator at US$19-$21 for pricing next Wednesday, September 25.
Evercore, Jefferies and Mizuho are also joint bookrunners.
Also early Monday, cancer drug developer Nuvalent launched one day of marketing for a US$350m stock sale that continues the flow of event-driven biotech follow-ons.
JP Morgan, Jefferies, TD Cowen and Stifel are targeting a fixed sum as they market the offering through Monday for pricing after the close.
Shares of Nuvalent soared 25% to US$108 in Monday's pre-market after it presented promising Phase I trial results for its lung cancer drug at a healthcare conference over the weekend.
Nuvalent discussed its financing plans in private in a targeted wall-cross before launching publicly.
Upstart launched a US$300m CB sale, enabling it to refinance an existing security sold in 2021 when the once high-flying AI fintech fetched a much higher stock price.
Barclays and Goldman Sachs are marketing the new five-year security through Monday's session at a coupon of 1.75%-2.25% and a conversion premium of 27.5%-32.5% for pricing after the close.
Upstart shares closed Friday's session at US$38.03, far from the US$400.36 conversion price (including a call spread) on US$661.3m of outstanding principal on its existing 0.25% CB due in 2026 that is being repurchased.
Upstart also plans to spend some of the proceeds from the new CB to purchase another call spread.
Refiled story: Adds additional IG deals