The US investment-grade corporate primary market expects to see the bulk of this week's offerings front-loaded due to the critical inflation reports due out later in the week.
At least five IG issues are expected to be priced today.
The high-yield arena saw four announcements this morning, with one of those offerings expected to price today.
A full menu of economic data will be spread out through the week with key inflation reports, including CPI, released on the last two days of the week. Data releases today include the Conference Board's Employment Trends Index as well as a short list of Fed speakers.
Deutsche Bank Research said in a report today that it will also be a busy week for Fed speakers.
"So it'll be interesting to see how they all react to the bumper payrolls print," Deutsche Bank said. "The last FOMC meeting minutes on Wednesday will be a bit stale but may give us a better understanding as to how policy might evolve under various scenarios."
September's employment report of 254,000 jobs created far outpaced the 150,000 expected.
And earnings season for the third quarter starts on Friday with several US banks, including JP Morgan and Wells Fargo, releasing results.
Corporate IG bond issuance this week is also expected to be higher.
"After supply disappointed to the downside last week, syndicate desks are expecting $15+bn in IG supply this week," BMO said in a report his morning. "That falls mostly in-line with the historical experience for the first full week of October, which has seen an average of $15.2bn in IG supply during the first full week of October."
In the ECM arena last week, three US$50m-plus IPOs priced, including one from StandardAero, and two smaller issues from FrontView REIT and China's BingEx.
Last week in the IG primary, 22 tranches were priced totaling US$15.45bn, which included the last day of September, lifting October IG volume to 17 tranches totaling US$13.1bn, according to IFR data. The average new issue concession for the week's IG offerings was 0.71bp and the average order book was 4.53x subscribed, according to the data. The average move from initial price thoughts to pricing was 29.205bp tighter.
In the HY primary last week eight tranches were priced totaling US$5.655bn.
The average IG bond spread narrowed by 3bp to 87bp on Friday, and the HY bond spread tightened by 15bp to 289bp, dipping below the post financial crisis low of 301 set on December 28 2021, according to ICE BofA data.
"High grade spreads narrowed 3-3.5bp following Friday’s strong across the board labor market reading, the largest single day narrowing of the year excluding the aftermath of August’s carry trade volatility," BMO said. "Spreads have narrowed a total of 14bp in the past month and now both of the high grade indices we track sit at the narrowest spread levels of the year."
HIGH GRADE
At least five investment-grade bond deals are expected to price on Monday.
Belgian bank and insurer KBC Group is marketing a six-year non-call five senior unsecured note. Leads set IPTs at US Treasuries plus 135bp area.
Toyota's US financing entity is selling a senior unsecured offering that includes three and seven-year fixed tranches, along with an 18-month floater. CNH Industrial Capital is looking to issue a US$400m three-year bond.
A subsidiary of Berkshire Hathaway Energy, Eastern Energy Gas is marketing a 30-year senior unsecured bond. Insurer Athene is selling a 30-year non-call 10 junior subordinated debenture in a fixed-rate reset format.
LEVERAGE/HIGH YIELD
Junk-rated borrowers continue to access the primary market against a positive backdrop for high-yield credit, with another handful of deals announced on Monday.
On the pricing roster today is a US$400m eight-year non-call three from Patrick Industries, which has set initial price thoughts at mid-to-high 6% area. Proceeds are going to refinance debt.
Elsewhere, another three borrowers have announced deals for pricing later this week.
Magnera, a newly formed specialty materials company, is out with a US$500m seven-year non-call three bond.
Proceeds are funding the spin-off and merger of Berry Global's health, hygiene and specialty nonwovens and film business with Glatfelter, a supplier of engineered materials
Elsewhere, Specialty Building Products is approaching investors with a US$375m five-year non-call two offering, while Jefferies Finance has announced a US$500m seven-year non-call three deal.
Proceeds from both those deals are being used for debt refinancings.
STRUCTURED FINANCE
The asset-backed primary is slated for a busy week with more than US$9bn of supply lined up for sale.
This morning, Hyundai announced a US$1.3bn prime auto issue, while Toyota started marketing a US$1.25bn prime auto deal.
Joining the two prime loan deals are a US$1.1bn subprime offering from Westlake and a US$710.3m fleet lease issue from Enterprise.
Offerings are expected from other asset classes, too. They include a US$1bn equipment offering from Dell and a US$664.7m consumer loan security from GreenSky.
Last week, 11 ABS issuers raised over US$6.6bn, bringing year-to-date supply to US$264bn, up 26% year over year.
LATAM
Special purpose vehicle Chile Electricity Lux MPC II is expected to price today an 11-year bond in a benchmark-sized transaction. Initial price thoughts are in the 200bp area over US Treasuries. Goldman Sachs, Itau and JP Morgan are leads.
Meanwhile, Brazilian plastics producer Braskem has mandated Citigroup, Itau, Morgan Stanley, Santander and SMBC to arrange calls with fixed income investors for a potential US dollar-denominated offering of senior unsecured 10-year bonds.
At the same time, Braskem this morning launched an offer to buy back its US$600m outstanding subordinated resettable fixed-rate notes due 2081. The early tender deadline is October 21, and the offer expires November 5.
El Salvador launched Friday evening an offer to buy back its bonds maturing in 2027, 2029, 2030, 2034, 2035, 2041, 2050, 2052, plus a macro variable interest only step-up note. The tender offer expires Thursday. JP Morgan is the dealer manager.
The sovereign will fund the tender with a concurrent issue of notes to a special purpose entity that will fund its purchase of the notes thorough a loan from JP Morgan.
The IDB this morning priced at 4.22% a £200m (US$262m) tap of its 4.125% senior unsecured sustainable development bonds due 2028. Citigroup, Deutsche Bank and NatWest Markets were lead managers.
EQUITIES
The rush is on to go public before the US presidential election.
Three IPOs, all from the life sciences sector, launched early Monday for pricing this Thursday, October 10, expanding this week’s slate of scheduled new issue pricings to five.
Still, bankers see relatively few IPOs lined up behind them and likely to price before the US presidential election on November 5.
Upstream Bio is seeking up to US$212.5m from its Nasdaq IPO.
JP Morgan, TD Cowen, Piper Sandler and William Blair are marketing 12.5m shares of the Phase II asthma drug developer at US$15-$17.
The offering terms imply a down round from the US$17.00 price investors paid in a US$200m Series B round in April.
The offering was well-covered at launch with demand from insiders, including anchor investors, and following earlier confidential marketing.
Upstream is touting an asthma drug it thinks has best-in-class potential to gain a share of an estimated US$7.5bn market.
Camp4 Therapeutics seems like a heavier lift as it looks to raise up to US$80m in a Nasdaq IPO that would prevent the cash-strapped biotech from running out of money.
JP Morgan, Leerink Partners, Piper Sandler and William Blair are marketing 5m shares of the early stage rare disease specialist at US$14-$16, a down round versus the US$16.50 mark at which it raised US$100.5m from a Series B round in June 2022.
The biotech only had US$12.6m left in the till at the end of June, which may help explain the discount.
CeriBell is seeking up to US$107.2m from a Nasdaq IPO to help fund the sales and marketing of its wearable device that uses AI software to help predict seizures.
Bank of America and JP Morgan are marketing 6.7m shares at US$14-$16, valuing the commercial stage medtech just under US$500m.
Already on the road for pricing this week is childcare operator KinderCare Learning's US$648m NYSE IPO (Tuesday night) and Brazilian motor oil maker Moove Lubricants' US$437.5m NYSE IPO pricing Thursday night.