The US investment-grade corporate primary is expecting at least four issues to price on Wednesday including offerings from Goldman Sachs and Morgan Stanley.
Yesterday just one IG offering was priced. JP Morgan raised US$8bn in four tranches, lifting October IG volume to US$37.15bn, according to IFR data. The offering was the first issue from a G-SIB amid third quarter earnings releases from the biggest banks in the US.
The new issue concession on the JP Morgan trade was negative 1bp and the order book was 4.36x subscribed, according to the data. The move from initial price thoughts to pricing was 25.1bp tighter.
"The strong demand for yesterday’s JPM deal undoubtedly paves the way for more post-earnings bank supply that is expected to be the engine behind this week’s issuance," BMO said. "Already Goldman has announced a deal this morning and more are expected to follow."
A large regional national bank, PNC Financial, is also in the primary market today.
In the HY primary on Tuesday one issue was priced totaling US$650m, pushing October HY issuance to US$9.71bn, IFR data show.
One economic data report is due out today, the September trade release, in an otherwise quiet session for data and Fed speakers. Yesterday saw higher inflation expectations reported in one of two data releases.
The average IG bond spread narrowed by 1bp to 83bp on Tuesday, setting a new post financial crisis spread level, and the HY bond spread tightened by 4bp to 293bp, according to ICE BofA data.
"High grade spreads closed 0-1bp narrower during yesterday’s session as credit (both cash and derivatives) outperformed a selloff in equities," BMO said.
Separately, Bank of America's October Global Fund Manager Survey released yesterday saw the biggest jump in investor optimism since June 2020 spurred on by Fed rate cuts, China stimulus and a soft economic landing scenario. Also, the survey saw the biggest jump in global growth expectations since May 2020.
And the survey showed the biggest jump in global equity allocation since June 2020 versus a record drop in bond allocation.
HIGH GRADE
At least four US investment-grade bond offerings are expected to price on Wednesday.
Goldman Sachs and Morgan Stanley are following in the footsteps of JP Morgan, which priced an US$8bn multi-tranche bond yesterday. Goldman is marketing six-year non-call five and 11-year non-call 10 notes, while Morgan Stanley is out with a three-part deal including opco and holdco paper.
Large US regional bank PNC Financial Services is looking to price an eight-year non-call seven senior unsecured note in a fixed-to-floating rate format. Leads set IPTs at 115bp–120bp area.
Alternative asset manager Antares is issuing a US$300m five-year senior unsecured note.
LEVERAGE/HIGH YIELD
NRG Energy is next out of the pipeline as it seeks to raise US$1.5bn today to refinance debt.
The company has announced a dual-tranche offering comprising an 8.25-year non-call three bond and a 10-year non-call five issue ahead of pricing today.
This comes after yoghurt maker Chobani printed yesterday a payment-in-kind bond to fund a dividend to its shareholder.
The deal was upsized to US$650m from US$500m after demand reached close to US$3bn, according to one investor looking at the trade.
STRUCTURED FINANCE
Several asset-backed issuers moved ahead on new offerings on Tuesday.
Yesterday’s deal announcements include, Driveway Finance, the main lender for Lithia Motors, with a US$614.9m prime auto loan offering, Mulligan with a US$120m small business loan trade and Stream Innovations with a US$239.27m home improvement receivables transaction. In addition, Santander came out with a subprime auto deal and Equify Financial with an equipment ABS offering.
Meanwhile, Bridgecrest hit the market yesterday with guidance on its US$538.98m subprime auto loan securitization. The biggest portion, the US$137.5m Triple A rated A2 tranche, has guidance of plus 60bp area.
At least three other auto issuers – Honda, Nissan and First Help – are slated to come with deals this week.
In the esoteric space, Concord is preparing to price a US$850m five-year note this week backed by music royalties. Guidance is US Treasuries plus 190bp-195bp.
In the CMBS market, property developer Tishman Speyer is seeking to sell a US$3.5bn bond to refinance a mortgage on the iconic Rockefeller Center in New York City. The deal would be the biggest CMBS issue of the year so far.
LATAM
Ecopetrol is expected to price today a dollar denominated offering, following last week's postponement. Initial price thoughts are in the low 8% area. BBVA, JP Morgan and Santander are the bookrunners.
EQUITIES
Tom Gores’ Platinum Equity launched an up to US$427.8m NYSE IPO of Ingram Micro on Tuesday, becoming the latest sponsor-backed company to test the depth of investor appetite just ahead of the US presidential election next month.
The technology distributor plans to sell 11.6m primary shares and Platinum is offloading 7m of its shares at US$20-$23 for pricing on Wednesday, October 23.
Platinum, which bought Ingram for US$7.2bn in 2021, will sell another 2.8m shares if the greenshoe is exercised, cutting its stake to as low as 89.6% from 99.3%.
Mutual fund manager Capital World Investors is buying US$70m of shares in the offering but is not subject to the standard 180-day lockup that will apply to Platinum’s remaining holdings.
Morgan Stanley, Goldman Sachs and JP Morgan are leading the offering.
Peak Resources expects to price an up to US$70.5m NYSE American IPO for pricing during the week of October 21.
Janney Montgomery Scott, Roth Capital and Texas Capital Securities are leading the sale of 4.7m new units in the energy MLP at US$13-$15, targeting a fully diluted market cap of roughly US$225m.
At a time when all of ECM is focused on Boeing’s fundraising plans, the aerospace giant’s woes are providing opportunities for smaller players in its sector.
VSE secured US$150m of funding from an overnight stock sale to help fund its US$200m purchase of sponsor-owned Kellstrom Aerospace.
Jefferies and RBC Capital Markets late Tuesday priced 1.7m shares in the aviation aftermarket parts distributor/maintenance repair services provider at US$87, within the US$86-$88 marketing range and 3.3% discount the US$90 closing price.
Also late Tuesday, Guidewire Software secured an upsized US$600m from the sale of a new five-year CB that will allow it to pay down an existing security due next year.
JP Morgan and Goldman Sachs priced the new CB at a 1.25% coupon and 30% conversion premium, having spent Tuesday marketing a US$500m offering at 1.375%-1.875% and 27.5%-32.5%.