The US investment-grade corporate primary expects at least three offerings to price today while the high-yield primary is looking at four issues.
It is a light economic data day with just one significant release, the ADP employment report, which came in higher than expected. The September jobs report is out later this week, and BMO said in a report today that ADP offered a positive skew to expectations for Friday's payrolls data.
In the IG primary on Tuesday, five issues were priced in 10 tranches totaling US$9bn to kick off the month of October and lift weekly supply to US$11.35bn, according to IFR data. The average new issue concession was 3.0bp and the average order book was 3.54x subscribed, according to the data. The average move from initial price thoughts to pricing was 26.50bp tighter.
The HY primary saw no offerings yesterday.
The average IG bond spread was unchanged at 92bp on Tuesday for the seventh consecutive market session, and the HY bond spread widened by 4bp to 307bp , according to ICE BofA data.
"High grade spreads were unchanged or modestly wider during yesterday’s session, outperforming a 1.5 widening in IG CDX spreads as geopolitical concerns weighed on risk sentiment," BMO said. "Tone is mostly neutral this morning as the situation in the Middle East continues to unfold, which shouldn’t stand in the way of IG supply today."
HIGH GRADE
At least three US investment-grade bond offerings are expected to price on Wednesday.
Farmers Insurance Exchange is looking to price a US$300m 40-year non-call 30 offering of surplus notes, a form of subordinated capital for insurers. Leads set IPTs in the 7.5% area.
A subsidiary of Australian property company Goodman Group is in the Yankee market with a 10-year senior unsecured note. Leads set IPTs at US Treasuries plus 170bp.
Electronics measurement company Keysight Technologies is marketing a 10-year senior unsecured note, after bookrunners held investor calls for the offering yesterday.
LEVERAGE/HIGH YIELD
The pace of issuance is picking up again in the US high-yield bond market with a string of borrowers expected to emerge from the pipeline on Wednesday.
Two oil and gas names Ascent Resources and Hilcorp Energy have announced deals for pricing today.
Ascent has set initial price thoughts of 6.75%-7.00% on a US$600m eight-year non-call three offering, while IPTs on Hilcorp's US$800m 10.25-year non-call 5.25 deal are 7.25%-7.50%.
Gaming and hospitality company Caesars Entertainment is also out with a US$1bn eight-year non-call three issue to refinance debt.
Meanwhile, two European names are approaching investors with aggressive structures to raise funding in both euros and dollars today.
German auto parts maker IHO Verwaltungs is seeking to raise the equivalent of about US$1.7bn through a multi-tranche PIK toggle offering that is linked to sustainability targets.
Belron, a British maker of glass for vehicles, has also launched a dual-tranche deal that is part of a funding package to pay an over €4bn dividend to its shareholders
STRUCTURED FINANCE
Several more asset-backed issuers are close to completing deals this week after five offerings raised more than US$3bn yesterday to kick off the fourth quarter.
This morning T-Mobile launched a US$500m mobile payment offering that the wireless carrier revived after shelving it in early August due to volatile market conditions. The Triple A rated note launched at Treasuries plus 70bp, after guidance of plus 73bp-75bp.
Ford and Nextgear are preparing their latest floorplan securitizations, which finance car dealer inventories.
Ford is in the market with two series of floorplan notes. One security with a three-year tenor totals US$741.4m, while the other with a five-year tenor is expected at US$317.8m.
As for Nextgear, it is seeking to raise US$328.7m via its second securitization of the year.
LATAM
LATAM Airlines on Tuesday priced an upsized US$1.4bn offering of five-year non-call two senior secured bonds.
With Citigroup, Santander, JP Morgan and Deutsche Bank as lead bookrunners, the Chilean airline printed the bonds at par to yield 7.875% or 436.5bp over US Treasuries.
Fitch assigned yesterday an A- expected rating to US$1.4bn of senior secured notes to be issued by special purpose vehicle Chile Electricity Lux MPC II.
Chile's state-owned Empresa de Transporte de Pasajeros Metro priced this morning a SFr155m (US$182.5m) seven-year debut green bond at par to yield 1.6925%. BNP Paribas was sole bookrunner.
Moody's yesterday upgraded Brazil to Ba1 from Ba2 citing credit improvements that the ratings agency expects will continue.
EQUITIES
Carlyle-backed StandardAero drew on strong demand for exposure to aerospace and defense stocks by pricing its NYSE above the marketing range for proceeds of US$1.44bn.
JP Morgan and Morgan Stanley led the already significantly upsized sale of 60m shares at US$24, above the US$20-$23 range.
The banks told investors ahead of pricing there were multiple anchor orders in place and to expect their allocation requests to be heavily scaled back.
The order books were 20x covered, syndicate sources said.
StandardAero's investment appeal was largely premised on the notion that existing aircraft fleets are going to need more maintenance services to stay in the air longer while manufacturers like Boeing struggle to deliver new planes.
Excluding Boeing, big gains this year in sector leaders such as GE Aerospace (+83% this year) and RTX (+48%) and Loar’s 150%-plus jump since its late April IPO have made aerospace and defense one of the best places to invest this year.
StandardAero shares will begin trading on the NYSE today under the symbol “SARO”.
Also late Tuesday, net lease landlord FrontView REIT secured US$250m from its NYSE IPO.
A syndicate led by Morgan Stanley, JP Morgan, Wells Fargo and Bank of America priced a full-size offering of 13.2m shares at US$19.00, inside the US$17-$21 marketing range.
The syndicate ran into some price sensitivity and relied on one-on-one conversions to support an in-range pricing outcome.
FrontView shares will trade on NYSE today under the symbol “FVR”.
Books are covered for Beijing-based logistics startup BingEx's Nasdaq IPO of up to US$68m set to price after Thursday’s close, according to IFR Asia.
Deutsche Bank, CICC and CLSA are the joint bookrunners for 4m American depositary shares marketed at US$15–$17 each.