The US investment-grade corporate primary expects just two offerings to price on Monday while the high-yield primary is eyeing just one issue today.
Economic data for the week ahead includes existing and new home sales data, durable goods. For Monday leading indicators is the only release expected, while a handful of Fed speakers dominate the session.
In the IG primary last week, 17 tranches in nine offerings were priced totaling US$26.3bn, lifting October volume to 54 tranches totaling US$55.45bn, according to IFR data. For last week the average new issue concession was 0.08bp and the average order book was 3.46x subscribed, according to the data. The average move from initial price thoughts to pricing was 25.85bp tighter
After falling slightly short of expectations last week of US$26.3bn of IG supply compared to expectations for approximately US$28bn, market participants are projecting US$21bn-$22bn of IG issuance this week, BMO said. For the month as a whole, October IG supply is seen at approximately US$91bn.
"The supply picture for the weeks ahead is looking very supportive with issuance early in November expected to be light as a result of the US Presidential election before giving way to seasonal doldrums amidst the arrival of the holiday season," BMO said.
In the HY arena last week, four tranches were priced totaling US$3.75bn, raising October volume to 17 tranches priced totaling US$12.735bn.
The average IG bond spread was unchanged at 83bp on Friday, for the fourth consecutive market session, and the HY bond spread edged in 1bp to 28bp, according to ICE BofA data.
"High grade spreads closed both Friday’s session and last week as a whole 1bp on either side of unchanged as spreads remain at historically low levels," BMO said.
At the same time, BMO said mutual fund flows continue to be very strong after most recent Lipper data showed a US$2.17bn inflow for high grade funds.
"That marks the eighth consecutive week of inflows of at least $1bn," BMO said. "Over the past quarter, a total of $22.215bn has flowed into IG mutual funds according to Lipper data, which is close to the $25.435bn that flowed into IG funds during the first quarter."
HIGH GRADE
At least two US investment-grade bond offerings are expected to come to market today.
Procter & Gamble is marketing five and 10-year senior unsecured notes, with IPTs set at a spread of US Treasuries plus 45bp area and 60bp area, respectively. The highly rated consumer goods maker last issued a US dollar investment-grade bond in January.
The US financing subsidiary of carmaker Honda is issuing a three-part senior unsecured note, including fixed tranches of three and seven years. The SEC-registered transaction will also have a three-year floater.
LEVERAGE/HIGH YIELD
With just over two weeks to go before the US presidential election, junk-rated borrowers are piling into the country’s primary market with at least eight issuers announcing deals on Monday.
On the pricing roster today is GoEasy, which is out with a dual-currency offering to fund a tender.
The Canadian lender is readying pricing on a US$350m 5.5-year non-call two bond along with a C$150m issue with the same tenor.
Also announced today are deals from renewable energy company Atlantica Sustainable Infrastructure, forest products company Mercer, fitness firm Life Time, mortgage provider Onity, Aris Mining, chassis manufacturer DCL and Constellation Oil Services.
All the issuers are raising funding to refinance debt, except Atlantica, which is approaching investors with euro and dollar-denominated green bonds to finance its acquisition of Energy Capital.
Meanwhile, Rise Baking continues to market a US$650m seven-year non-call three offering, which is expected to price this week. Proceeds will help fund a US$2bn acquisition of the company by Platinum Equity and Butterfly Equity.
STRUCTURED FINANCE
The securitization primary will take a breather while thousands of market participants are convening at a major industry gathering.
More than five thousand bankers, investors, lawyers and other players in the structured finance market are expected to attend the ABS East conference at Fontainebleau resort in Miami. The 30th edition of the event is slated to kick off today and conclude on Wednesday.
Today's agenda covers a range of subjects including market outlooks and focus on asset classes such as auto, CRE CLOs and leveraged loans.
Asset-backed volume was robust before the conference. Last week nearly US$10bn of supply printed, following the busiest week of the year when more than US$14bn of issuance landed.
LATAM
Nueva Elektra, a subsidiary of Mexico's Grupo Elektra, began to meet with investors on Friday for a benchmark-sized seven-year senior secured dollar-denominated 144A/Reg S bond offering. BCP Securities and Jefferies are the global coordinators.
Telecom Argentina began holding meetings today with fixed-income investors for an add-on to its 9.5% senior unsecured notes maturing 2031. The global coordinators are Deutsche Bank, JP Morgan, Latin Securities and Santander.
Argentine electric utility Edenor raised on Friday US$135m from a 9.75% six-year senior unsecured bond at a yield of 10.5%.
Bank of America, BCP Securities, BTG Pactual, Credit Agricole and UBS were the global coordinators.
Ecopetrol announced today that it will purchase US$803m of its outstanding US$1.25bn 5.375% notes due 2026. BBVA, JP Morgan and Santander were the dealer managers on the tender offer.
EQUITIES
Boeing's tentative agreement reached over the weekend with its machinists union to end a damaging strike is significant to putting in place new financing needed to offset operating losses and stabilize credit ratings.
Announced by union leadership Saturday morning, the proposal would increase wages by 35% over a four-year period. Union members, which had rejected a proposed 25% wage increase, are due to vote on the new proposal on Wednesday, October 23, the same day the aircraft manufacturer is scheduled to report third quarter earnings.
Boeing, rated Baa3/BBB-/BBB-, one notch above investment grade, last week filed documents with the SEC to sell up to US$25bn of securities and separately put in place a US$10bn supplemental credit facility. The new financing package is expected to include US$10bn-$15bn of equity and equity-linked securities.
In regular-way activity, Atlantic Union Bankshares raised US$350m from a follow-on stock sale launched and priced ahead of the market open Monday.
The Mid-Atlantic regional bank is using the money to partially fund the US$1.6bn acquisition of Sandy Spring Bancorp that was announced alongside the capital raise.
Morgan Stanley, as lead bookrunner, confidentially marketed the acquisition to investors before flipping public early Monday on the sale of 9.9m new shares at US$35.50, an 8.5% discount to the US$38.81 last sale price Friday. The bank was fully covered at launch and the offering was placed entirely with wall-crossed investors.
Septerna launched an up to US$185m Nasdaq IPO early Monday that looks to continue the biotech sector’s recent winning streak.
JP Morgan, TD Cowen, Cantor and Wells Fargo are marketing 10.9m shares at US$15-$17 for pricing this Thursday, October 24.
The early-stage biotech’s IPO targets a market capitalization of roughly US$650m, a significant step-up from the US$10.62 per share valuation on a US$150m Series B private funding round earlier this year.
RA Capital led the Series B with a US$30m investment.
Septerna’s offering was fully covered at launch with support from existing shareholders and new investors who participated in earlier testing-the-waters efforts.
Septerna is using money from the IPO to complete a Phase II drug trial to treat hypoparathyroidism as well as earlier-stage trials.
Ingram Micro’s circa US$430m IPO is multiple-times covered ahead of scheduled pricing after the market close Wednesday. Morgan Stanley, Goldman Sachs and JP Morgan are closing the books on 18.6m shares being marketed at US$20-$23 at 4:00pm Tuesday, giving them one full day to sort through orders.
Energy MLP Peak Resources is also on the calendar with an up to US$70.5m NYSE American IPO likely to price on Wednesday or Thursday.