Continuing to take advantage of current borrowing rates and keen investor appetite, the US investment-grade bond primary is pumping out more offerings today, with at least six issues set to join the 23 issues already sold this week.
The high-yield arena is also active, with six offerings set to join the 10 issues sold over Monday and Tuesday.
Deutsche Bank Research noted that markets have continued to push higher over the last 24 hours, with the S&P 500 inching up 0.25% to its 41st record high this year. Softer US data for consumer sentiment was a concern for investors and slowed the momentum with lingering fears about a potential downturn given the jobs numbers over recent months, Deutsche Bank said.
The data pushed investors to consider the chance that the Fed would deliver another 50bp rate cut at their next meeting in November, and futures raised the probability from 54% to 62% on the day, Deutsche Bank said.
Housing data dominates the slate today for US economic data releases.
On Tuesday 11 IG offerings were priced in 17 tranches totaling US$10.50bn, lifting weekly issuance to US$23.950bn and September IG volume to US$159.650bn, according to IFR data. The average NIC for the offerings was 1.07bp and the average order book was 4.12x subscribed, the data show. The average move from initial price thoughts to pricing was 31.09bp tighter.
"Despite the heavy supply, reception to new IG issues remains extremely strong," BMO said in a report today.
BMO noted that the weekly IG tally was just shy of US$24bn, already slightly above expectations of US$23bn for the week with two sessions remaining.
In the HY arena seven issues were priced totaling US$3.16bn, pushing weekly volume to US$4.41bn and September volume to US$31.84bn, according to IFR data.
The average IG bond spread remained unchanged at 92bp on Tuesday and the HY bond spread widened by 6bp to 321bp, according to ICE BofA data.
"IG index spreads narrowed 0-1bp during yesterday’s session, and the ICE Corporate index opens this morning at a spread to Treasuries of 92bp. That’s the narrowest spread for the IG index since July 16," BMO said.
HIGH GRADE
At least six US investment-grade bond offerings are expected to price today.
Cloud computing service provider Oracle is in the market for a four-part bond to refinance US$8bn of near-term debt maturities. The multi-tranche offering comprises five, 10, 30 and 40-year tenors.
Private credit lender Ares Strategic Income Fund and insurer American National Group are both issuing five-year senior unsecured notes.
Johnsonville Aeroderivative Combustion Turbine Generation, an entity linked to the Tennessee Valley Authority, is marketing a US$720m 30-year senior secured note.
Adding to this week's Yankee offerings, Danske Bank is issuing a six-year non-call five senior non-preferred bond in a fixed-to-fixed rate structure. Korean telecom company KT Corp is marketing a long three-year US dollar bond.
LEVERAGE/HIGH YIELD
Junk-rated borrowers continue to join the festivities in the US high-yield primary market after seven issuers raised US$3.16bn on Tuesday.
By week’s end, primary volumes for the asset class are likely to exceed the US$32.05bn seen in May, so far the busiest month in high-yield since 2021, according to IFR data.
The newest additions to the pipeline are Post Holdings, Intelligent Packaging and PetSafe. All three issuers are looking to price deals today.
PetSafe (via CD&R Smokey Buyer) has set price talk of 9.75% area on a US$775m five-year non-call two offering, while Post Holdings is out with a US$500m 10-year non-call five bond.
Intelligent Packaging, meanwhile, is preparing an add-on to its 6.00% 2028s
Sable International, the finance subsidiary of Cable & Wireless, packaging and labelling firm LABL, and energy company NorthRiver Midstream are also expected to price deals today.
STRUCTURED FINANCE
Asset-backed pricing will slow today after eight issuers raised over US$4bn yesterday.
Several esoteric ABS deals remain on the calendar for sale this week: a US$379.4m triple net lease securitization from Capital Automotive, a US$250m data center deal from Vantage and a US$250m consumer loan debut from Cherry Technologies.
In the CMBS sector, there is a US$966.95m 10-year conduit offering slated for sale this week.
Yesterday, Morgan Stanley sold a US$436.3m self-led bond backed by commercial mortgages it purchased from a Blackstone-led investor group in March.
Meanwhile, more RMBS deals have emerged for pricing by Friday. Annaly and Ellington yesterday released price guidance on their latest non-QM issues, which together would raise US$817.6m.
LATAM
Oceanica is expected to price today a US$375m five-year non-call two senior secured note. The sub-sea oil and gas engineering firm announced the deal yesterday with initial price thoughts in the 13% area.
Bradesco, BTG Pactual, Goldman Sachs, Itau, Santander and UBS are the bookrunners.
Meanwhile, special-purpose vehicle Kingston Airport Revenue Finance today announced a US$470m offering of 12-year senior secured bonds via Citigroup as sole bookrunner. Initial price thoughts are in the low 7% area.
Yesterday, Fitch assigned Niagara Energy a BBB- first-time long-term issuer default rating. It also assigned a BBB- to the company's proposed US$1.2bn senior unsecured notes. The outlook is stable.
Niagara will use the proceeds to refinance the equivalent of US$1.28bn of loans used to buy its operating subsidiary Orygen Peru. Niagara owns 92.35% of Orygen, its only source of dividends to service debt, according to Fitch.
Yesterday, LatAm sovereign five-year CDS tightened 2bp for Brazil, Peru and Colombia, according to Lucror Analytics.
EQUITIES
BioAge Labs upsized its Nasdaq IPO by 40% to US$200m early Wednesday, leading a trio of companies scheduled to price new issues after the close.
The weight loss drug developer now expects to sell 10.5m shares in the offering, up from 7.5m shares at launch, but left the original US$17-$19 marketing range unchanged.
BioAge also scaled back a concurrent private placement to Sofinnova Venture Partners to US$10.6m from US$15m at launch.
Even after the upsize, the offering remains multiple times covered with demand from both new and existing investors and no signs of price sensitivity, syndicate bankers said.
Goldman Sachs, Morgan Stanley, Jefferies and Citigroup are leading the offering.
Investors seem less excited about nursing home pharmacist Guardian Pharmacy Services (US$108m) and natural gas E&P BKV (US$315m), though both IPOs are covered and on track for pricing after the market close.
Guardian is expected to price its NYSE offering of 6.75m shares within the US$14-$16 marketing range. BKV’s NYSE offering of 15m shares at US$19-$21 is still getting valuation feedback for investors, according to bankers, pointing to price sensitivity.
Elsewhere, Snowflake raised US$2bn from equal-sized tranches of zero-coupon convertible bonds that will allow cloud data software firm to buy back stock with a more valuable security.
Goldman Sachs, JP Morgan and Barclays priced the US$1bn offerings of three-year and five-year CBs (for US$2bn in total) with zero coupon and a 40% conversion premium, above the issuer-friendly end of the 32.5%-37.5% premium price talk.
After buying back US$400m of stock at Tuesday’s closing price of US$112.50, Snowflake is using some of the proceeds to buy a capped call that would boost the conversion price from US$157.50 initially to US$225, a 100% premium.