The US investment-grade corporate primary expects just three offerings today as the CPI report release approaches and earnings blackouts begin.
The high-yield primary is expecting at least two offerings to price, while the LatAm arena is also looking at two issues.
Just one economic data release is slated for Wednesday, wholesale trade for August, but there is a bevy of Fed speakers lined up throughout the day for markets to analyze on the eve of the CPI report release. In addition, the Fed minutes from the previous FOMC meeting will be released at 2:00pm New York time.
On Tuesday four IG offerings were priced in the IG primary totaling US$7.1bn, lifting weekly issuance to US$13.35bn and October volume to US$26.45bn, according to IFR data. The average new issue concession for yesterday's offerings was 1.33bp and the average order book was 2.33x subscribed, according to the data. The average move from initial price thoughts to pricing was 24.50bp tighter.
BMO said in a report today that yesterday's supply is "giving the week a very good chance to hit expectations for $15+bn with a benchmark deal from Rabobank announced already this morning."
Also, BMO noted that reception to yesterday’s supply remained solid with average concessions paid in the low single digits.
"Order book coverage was relatively light, with yesterday’s eight tranches averaging just 2.4x oversubscribed, but that’s likely more a function of the composition of yesterday’s slate than any drop in demand for new IG issues with yesterday’s slate dominated by Yankee banks that often print with relatively lower order book coverage," BMO said.
In the HY primary yesterday just one offering was priced totaling US$1.8bn, lifting weekly issuance to US$2.3bn and October volume to US$5.95bn.
The average IG bond spread edged out 1bp to 87bp on Tuesday and the HY bond spread widened by 4bp to 299bp, according to ICE BofA data.
"High grade spreads were unchanged or modestly wider during yesterday’s session," BMO said.
"Credit spreads are extremely narrow and likely have little room to tighten meaningfully further from here," BMO said. "That makes the task of finding any pockets of relative value extremely important in the current environment."
HIGH GRADE
At least three US investment-grade bond deals are expected to price on Wednesday.
Private credit investor Blackstone Secured Lending is issuing a 3.5-year senior unsecured note.
Alternative asset manager Ares Management is marketing a 30-year senior unsecured note. Proceeds from the bonds and a sale of mandatory convertible preferred stock will be used to fund the cash portion of its acquisition of GCP.
Dutch lender Cooperatieve Rabobank is issuing a five-year senior preferred offering, in both fixed and floating-rate formats.
LEVERAGE/HIGH YIELD
At least two junk-rated borrowers are expected to price bond deals on Wednesday.
Jefferies has set price talk of 6.625% area on a US$500m seven-year non-call three offering.
Special Building Products is also looking to raise US$375m today through a five-year non-call two bond that is being talked in the 8% area.
Elsewhere, UK E&P company Ithaca Energy has joined the pipeline with a US$700m five-year non-call two offering. Proceeds are going toward debt refinancing.
STRUCTURED FINANCE
At least three asset-backed issues are expected to price today, adding to a robust week of issuance that has already topped US$8bn.
Carmaker Stellantis is prepared to land today a US$925m prime auto loan securitization, while fintech firm GreenSky is slated to complete a US$664.7m issue backed by home improvement loans. Consumer lender Mariner Finance is on track to price a US$300m consumer loan deal.
The rest of the week's ABS calendar includes a US$1.25bn prime auto offering from Toyota and a US$885m data center securitization from Centersquare.
LATAM
Brazilian plastics producer Braskem is expected to price today a US dollar offering of senior unsecured 10-year bonds. Initial price thoughts are in the mid 8% area. Citigroup, Itau, Morgan Stanley, Santander and SMBC are the bookrunners.
Also today, Argentina's YPF is returning to the market with its third offering of the year, this time with an eight-year senior unsecured dollar deal. Initial price thoughts are in the mid to high 8% area. Citigroup, Itau, JP Morgan and Santander are the bookrunners.
YPF has raised US$1.3bn so far this year from two seven-year offerings.
Yesterday, Ecopetrol raised US$1.75bn from a seven-year senior unsecured note, pricing it at 7.65%. BBVA, JP Morgan and Santander were the bookrunners.
EQUITIES
KinderCare Learning priced its NYSE IPO towards the bottom of the marketing range for proceeds of US$576m, returning the childcare operator to public markets for the second time in its 55-year history.
A syndicate led by Goldman Sachs, Morgan Stanley, Barclays and JP Morgan late Tuesday sold 24m shares of KinderCare at US$24, towards the lower end of the US$23-$27 marketing range.
The order book was multiple times covered with the top 10 accounts taking 55% of the offering and the top 25 allocated 85%.
Investors were cautious about paying up for the company given the lingering sponsor overhang, the expiration of some industry subsidies this year, uncertainty around the presidential election on how it will affect the industry and doubts about the growth outlook given center occupancy rates are already back above pre-Covid levels.
Based on the final terms, KinderCare commands an enterprise value of US$3.6bn, more than double the US$1.5bn sum that sponsor Partners Group paid for the business in 2015.
KinderCare, which was public for 20 years before it went bankrupt in 1992 and before passing through the hands of multiple private equity owners, will resume NYSE trading later Wednesday under the symbol “KLC”.
Brazilian motor oil maker Moove Lubricants is seeking to price a US$437.5m NYSE IPO later on Wednesday, while Camp4 Therapeutics, Ceribell and Upstream Bio look to price their debut offerings on Thursday.
Ceribell is shaping up as the week’s hottest IPO after upsizing its Nasdaq offering to US$180m early Wednesday.
The medical technology company now plans to sell 10.6m shares at US$16-$17, an overall 68% increase in the potential proceeds versus the original terms of 6.7m shares at US$14-$16.
Existing shareholders led by Longitude Capital, Ally Bridge Group, Red Tree and Ceribell’s management team are backing the offering with up to US$40m of upfront demand.
The offering, led by Bank of America and JP Morgan, is multiple times covered, even after the upsize. The banks expect to close the order books at 4:00pm on Wednesday, a day ahead of pricing late Thursday.