The US investment-grade corporate bond primary today is winding down the month of September, already the busiest September for IG volume, with three offerings expected to price on Monday.
And the high-yield primary continues to pump out offerings with at least three issues slated for sale today. Over in the ECM arena, IPOS are heading to market with at least three slated for this week.
For the week ahead, syndicate desks are expecting approximately US$20bn in new IG issuance this week, BMO said in a report today.
Bank of America Research said it expects IG supply in the US$25bn-$35bn range next week. "The underlying strong pace of IG supply is showing no signs of slowing," BofA said.
Economic data releases this week include ISM Manufacturing PMI, ISM Services PMI and the the ADP Employment report, as well as the September jobs report. Today, Federal Reserve Chair Jerome Powell speaks before the National Association for Business Economics 66th annual meeting in Nashville at 1:55pm New York time.
No offerings were priced in the IG primary last Friday. For the week, 54 tranches were priced totaling US$41.22bn and September volume so far stands at 224 tranches totaling US$176.92bn, making it the busiest September ever for IG issuance recorded, according to IFR data. That number does not include any offerings to be priced today, the last day of the month.
September 2020 was the previous record holder, when US$165.9bn was sold.
The HY primary saw one offering priced on Friday totaling US$500m issues, lifting weekly issuance to US$9.695bn sold in 19 tranches and September volume to US$37.125bn sold in 57 tranches, the data show.
The average IG bond spread was unchanged at 92bp on Friday for the fifth consecutive market session and the HY bond spread was also unchanged at 314bp, according to ICE BofA data.
"High grade spreads were mostly unchanged on Friday and closed last week as a whole approximately 1bp narrower at the tightest levels in three months," BMO said. "Despite increasing geopolitical concerns coinciding with an escalation in Middle East tensions over the weekend, spreads are mostly unchanged in early trading this morning."
HIGH GRADE
At least three investment-grade bond offerings are slated to price on Monday.
Darden Restaurants, the operator of Olive Garden, is in the market with an offering three and five-year senior unsecured notes via Bank of America, Truist Securities, US Bancorp and Wells Fargo. Proceeds will be used to fund an acquisition.
Elsewhere, Campbell Soup is readying a two-part offering of long 10-year notes and 30-year bonds via Barclays, BNP Paribas, Bank of America, Citigroup, JP Morgan and UBS. Today’s other deal comes from Union Electric, which is preparing a US$450m 30-year green bond. Bank of America, Barclays, JP Morgan and Morgan Stanley are bookrunners.
LEVERAGE/HIGH YIELD
The primary market for US high-yield bonds looks set for another busy session as three borrowers line up to price deals today.
Fortress Transportation and Infrastructure Investors is out with a US$400m 8.5-year non-call three offering ahead of pricing today.
The company, which owns and maintains commercial jet engines, is using the proceeds to redeem 2027 notes and repay borrowings under a revolver.
Univision, meanwhile, is back in the market with a US$755m add-on to its 8.5% 2031s to refinance debt.
The Spanish language TV network issued the 2031s in May at par. Those bonds were trading on Friday at a dollar price of 101.989 to yield 7.983%, according to MarketAxess data.
Also on the pricing roster today is a US$750m eight-year non-call three offering from Terex. The manufacturer of lifting machines is using proceeds to help fund its acquisition of Environmental Solutions Group from Dover in a US$2bn cash transaction.
Elsewhere, IHO Verwaltungs is straddling both the euro and dollar markets as it seeks to raise the equivalent of around US$1.7bn through a multi-tranche offering of sustainability-linked senior secured PIK toggle notes.
STRUCTURED FINANCE
The asset-backed primary is poised for a muted end to the third quarter when over US$74bn of supply priced so far, bringing year-to-date issuance to US$259.1bn.
At least eight ABS offerings are set for sale this week, although dealmakers say those deals will price in the fourth quarter.
This morning, Porsche announced a US$750m auto lease securitization, which marks its second deal since returning to the market earlier this year for the first time in nearly a decade.
Joining Porsche is another German car-maker. BMW is in the market with a US$1bn lease offering that is expected to price tomorrow.
Elsewhere, NextGear is returning to the ABS market this week with its second car dealer floorplan transaction of the year. The deal is expected to raise US$328.662m.
Outside of the auto space, there is a US$500m mobile payment device deal from T-Mobile. The US wireless carrier revived the deal after shelving it back in early August due to volatile credit conditions.
Meanwhile, the CMBS sector is set for another active week as declining borrowing costs and maturing loans are driving fundraising in this part of the structured finance market.
A group of lenders is planning to sell a US$749.4m five-year conduit deal, while Blackstone is seeking to complete a US$600m office-backed issue and Ares is working on a US$475m industrial offering.
LATAM
Fitch assigned today a final BBB rating to a S1.25bn (US$335m) tap of the Metropolitan Municipality of Lima's 2043s.
The transaction was structured by Bank of America, the city government said in a press conference September 20. Around 20% of the bonds were purchased by American investors, and 5% by European investors, the city government said.
EQUITIES
KinderCare Learning launched a US$648m NYSE IPO early Monday that would return the childcare provider to public ownership after nearly 30 years in private hands.
Goldman Sachs, Morgan Stanley, Barclays and JP Morgan are leading the sale of 24m primary shares in KinderCare at US$23-$27 each for pricing on Tuesday, October 8.
The IPO values the Oregon-based operator of 1,500 early childhood education centers and 900 before-/after-school sites at up to US$4.4bn, well up from the US$1.5bn paid by sponsor Partners Group in 2015.
Partners, whose stake will be diluted to 71.1% post-IPO, tried to take KinderCare public in 2021-2023 before withdrawing the offering in July last year and then refiling confidentially in July this year. The timing just before the US presidential election is notable because one campaign issue is the high cost of childcare.
Having had multiple owners since KKR bought the company for US$600m in 1996 (including a stint as part of Michael Milken’s Knowledge Universe), KinderCare is using the IPO proceeds mostly to cut its net debt load to less than US$1bn from about US$1.5bn versus fiscal 2023 adjusted Ebitda of US$266.4m.
Carlyle-backed StandardAero's already upsized US$1.4bn NYSE IPO looks poised to keep the positive dealmaking momentum going even as earnings blackouts around the looming end of Q3 tamp down other equity issuance near-term.
JP Morgan, Morgan Stanley, Bank of America, UBS, Jefferies and RBC Capital Markets are leading a syndicate of 17 banks now seeking to sell 60m shares or about 18% of the aircraft engine maintenance and repair services firm at US$20-$23.
On Friday, StandardAero upped the number of primary shares in the offering to 53.25m from 46.5m at launch on Monday at the same pricing target.
Carlyle and its co-investor, Singapore’s GIC, are selling another 6.75m shares or about 2.5% of their holdings.
Net lease landlord FrontView REIT’s US$277.2m NYSE IPO, also pricing late Tuesday, is the latest sign of a rebound in REIT issuance as interest rates have come down in recent months and bolstered bond proxies.
Beijing-based on-demand courier services firm BingEx set terms on Friday for a US$68m Nasdaq IPO scheduled to price this Thursday, October 3, that gives investors a way to play a recent recovery in US-listed stocks from China.