The US investment-grade primary expects just two offerings to price today, including big money-center lender Bank of America.
Over in the high-yield arena, just one offering is expected to land. The structured finance primary is expected to stay quiet because many bankers are attending the annual ABS East conference in Miami.
Several IPOs could make their way into the ECM arena, but overall activity levels are stuck in neutral in the heart of the earnings season and with the pending US presidential election keeping many issuers out of the market.
The economic data calendar is light today, with two regional Fed banks releasing reports.
A sell-off in US Treasuries yesterday, which joined a global sell-off of sovereigns, was spurred on in part by concerns about country debt and deficits, Deutsche Bank Research said in a report today.
"Indeed, the IMF pointed out in their recent Fiscal Monitor that global public debt is forecast to exceed $100 trillion this year, and rise further in the medium term, so this is a growing issue as policymakers gather for the IMF/World Bank Annual Meetings in Washington this week," Deutsche Bank said.
The bank's US economists, Deutsche said, have pointed out that irrespective of who wins the presidency or Congress in two weeks, they could see deficits in the 7-9% area over 2026-28, which is a level unprecedented outside of major wars or massive economic shocks like the Great Financial Crisis and Covid-19.
This morning US Treasury yields edged down, with the benchmark 10-year note yield hovering around 4.17%.
On Monday just two IG offerings were priced totaling US$2.75bn in five tranches, lifting October supply to US$58.2bn, according to IFR data. The average new issue concession was 2.50bp and the average order book was 2.09x subscribed, the data show. The average move from initial price thoughts to pricing was 23.25bp tighter.
In the HY arena, one issue was priced totaling US$400m in one tranche, pushing October volume to USS$13.135bn.
The average IG bond spread edged wider by 2bp to 85bp on Monday and the HY bond spread remained unchanged at 288bp, according to ICE BofA data.
"IG index spreads widened 2bp during yesterday’s session alongside higher Treasury yields and relatively light volume running approximately 14% behind average pace for a Monday," BMO said. "Despite the 2bp backup, client activity was split evenly between buying and selling."
Separately, Citi Research said in a report on foreign flows released late yesterday that global investors pared holdings of US-issuer corporate bonds for the second consecutive month in August.
"We estimate that overseas investors reduced holdings by $16.0bn, according to our value-adjusted framework," Citi said, adding that year-to-date foreign demand for corporates of US$143bn through August has fallen below the 2023 pace, which set an annual record.
"Higher-frequency indicators of foreign demand suggest overseas appetite for US corporate paper picked up into September, as U.S. yields began to increase," Citi said.
HIGH GRADE
At least two US investment-grade bond offerings are expected to price today, the same number as yesterday. Nonetheless, volume is expected to pick up as one of the offerings is a large multi-tranche deal.
Health insurer Elevance Health is in the market with a six-part bond offering, comprising two, five, seven, 10, 30 and 40-year maturities. The health insurer last issued a high-grade bond in May, raising US$2.6bn from a three-part transaction.
Bank of America is marketing an 11-year non-call 10 subordinated note in a fixed-to-floating format. The US money-center bank is likely to achieve a much lower spread than an identical US$2.5bn offering it printed in August at Treasuries plus 152bp. This time, Bank of America set IPTs at 155bp area, with the deal expected to tighten further from that level.
LEVERAGE/HIGH YIELD
Raven Acquisition Holdings became the latest issuer to join a growing pipeline of junk-rated borrowers seeking to price bonds this week.
The company, which manages revenues for the healthcare industry, has announced a US$1bn seven-year non-call three offering ahead of expected pricing on Thursday.
Proceeds will help fund the acquisition of the company by TowerBrook Capital and Clayton Dubilier & Rice.
Meanwhile, fitness firm Life Time is poised to price today a US$400m seven-year non-call three offering after setting price talk at 6% area.
STRUCTURED FINANCE
The securitization primary is expected to stay muted because many dealmakers are attending the annual ABS East conference in Miami.
Deal pricing will pick up in earnest when market participants return to the office after the gathering concludes tomorrow. Today's agenda includes outlooks for various assets in the structured finance market ranging from consumer ABS to CLO. There are also panels focusing on credit risk transfer and financing for digital infrastructure.
At the same time, issuers are not completely idle this week. Blackstone yesterday released guidance on its US$755m green data center issue. The US$407.8m Triple A rated 10-year note is assessed at 120bp area over US Treasuries.
Meanwhile, a notable forthcoming issue is Tesla's first securitization backed by loans for products sold through its energy generation and storage business.
LATAM
Aeromexico yesterday mandated Barclays to arrange meetings with fixed income investors starting today through Thursday.
Aris Mining, a gold miner whose primary operations are based in Colombia, announced yesterday a US$400m offering five-year non-call two senior notes. Pricing is expected to take place on Thursday. Bank of America and Jefferies are the joint bookrunners.
Braskem said yesterday that it will repurchase the US$368.6m tendered by bondholders by the early deadline of its offer to buy back US$600m of outstanding subordinated resettable fixed-rate notes due 2081. The tender offer expires on November 5.
The IMF projects GDP for Latin America and the Caribbean to grow at 2.1% for 2024 and 2.5% for 2025, according to its World Economic Outlook report released today. Argentina is expected to contract 3.5% in 2024 and to grow 5% in 2025.
EQUITIES
Last night saw one company raise money through an overnight stock sale and two companies from the 2024 IPO class market secondary sell-downs of stock on behalf of financial sponsors.
Aspen Aerogels secured US$80m through a capital-committed block sale late Monday, a week after landing a big government loan and pre-announcing quarterly results.
Goldman Sachs and Morgan Stanley offloaded their joint purchase of 4.25m shares at US$20.00, toward the upper half of the US$19.40-$20.40 range marketed overnight and a 6.2% discount to the US$21.33 Monday closing price.
The specialty chemicals company last week announced that the US government had agreed to extend an up to US$670m low-cost loan to fund construction of a plant. The plant makes a thermal barrier used to prevent thermal runway in EV batteries.
The loan is non-recourse, will carry an interest rate at benchmark Treasuries (no spread) and is contingent on meeting certain financial thresholds.
Two members of the 2024 IPO class launched first-time, all-secondary follow-on stock sales after the close, UK broker Marex and P&C insurer Bowhead Specialty.
Both sell-downs are being marketed for two days for pricing after Wednesday’s close, and both are coming at a premium to their IPO prices.
Marex’s circa-US$180m secondary sell-down comes a day after lock-up associated with its April IPO, while Bowhead was granted early release from its May IPO lock-up to move ahead with a roughly US$120m offering.
Ingram Micro will close the order books at 4:00pm Tuesday on its IPO of 18.6m shares marketed at US$20–$23 ahead of Wednesday pricing and Thursday debut.
Morgan Stanley, Goldman Sachs and JP Morgan have communicated that the offering is multiple-times covered with support from long-only investors, led by a US$70m anchor order from Capital World.