No offerings are expected in the US investment-grade and high-yield primaries on Friday.
Some key economic data slated for today, including durable goods and the October University of Michigan Survey of Consumers.
No offerings were priced in the IG primary yesterday and it also marks the 17th non-Friday/holiday no-print session of the year, according to IFR data.
"That’s the lowest number of 'goose eggs' in the IG market through this point in the year since 2021, an unsurprising development considering the amount of supply this year and consistently strong tone in the primary market," BMO said in a report today.
The HY primary was very active on Thursday with five offerings totaling US$4.05bn, lifting weekly HY issuance to US$6.895bn and October HY volume to US$19.63bn, according to IFR.
The average IG bond spread was unchanged at 86bp on Thursday and the HY bond spread tightened by 2bp to 293bp, according to ICE BofA data. Yields across asset classes were mixed yesterday.
"High-grade spreads were mostly unchanged during yesterday’s session and sit 3bp wider on the week heading into the final session," BMO said.
For the week ended October 23, Lipper US Fund Flows reported that the all short-intermediate investment-grade debt funds/ETFs net inflow was US$1.879bn and the all corporate high-yield debt funds/ETFs net inflow was US$33.67m. The all domestic equity funds/ETFs net outflow was US$1.763bn and the all nondomestic equity funds/ETFs net inflow was US$2.313bn.
HIGH GRADE
The US investment-grade bond market is not expecting fresh offerings on Friday, capping a relatively muted week for new issuance.
Though issuance is likely to remain subdued in the run-up to the US presidential election on November 5, market participants say investors remain open to buying corporate credit through the new-issue market.
“I am not concerned about the supply picture either on a short-term or medium-term basis. There’s a willingness to take on new deals, and there’s ample dry powder to do so,” said Jonathan Aal of Smith Capital Investors.
At the same time, he said that investors are cautious on near-term positioning. The combination of tight credit spreads and the uncertainty about the election outcome may hold investors back from taking risks in the corporate bond market over the next two weeks.
"People are in a holding pattern because of the election," said Aal. "Investors are doing the math and saying, 'I don't need to add a whole lot here before the election.'"
LEVERAGE/HIGH YIELD
The primary market for US high-yield bonds is taking a breather on Friday, with no new deal announcements this morning.
This comes after a busy Thursday, when five issuers hit the market to raise a combined US$4.05bn against what remains a buoyant backdrop for borrowers.
Two of those borrowers – Raven Acquisition and Rise Baking – brought acquisition-driven deals.
Raven upsized a seven-year non-call three offering to US$1.3bn from US$1bn before pricing the deal at par to yield 6.875%, inside price talk of 7.00%-7.25%
Rise Baking, meanwhile, priced a seven-year non-call three at par to yield 8.625%, inside talk of 8.75%-9.00%. That deal was also upsized to US$900m from US$650m.
STRUCTURED FINANCE
Dealmakers will continue to work on bringing deals from a variety of assets for sale in the coming week.
ABS supply has been scant this week, with pricing activity on pause due to the ABS East industry conference.
Among the sector's upcoming issues are a US$850m music royalty offering from Blackstone's Hipgnosis and a US$262m fiber network securitization from GI Partners' Blue Stream.
The CMBS sector has been active, with two non-agency deals raising over US$1bn yesterday.
More commercial property deals are on the way. Brookfield on Thursday released price guidance on a US$599m bond backed by its mall in Colorado. The US$369m Triple A rated five-year tranche is assessed in a 140bp area over US Treasuries. Another offering is a US$475m deal from US real estate developer Jeffrey Soffer, who is seeking to refinance one of his resorts in Florida.
LATAM
Nueva Elektra del Milenio (Mexico Remittances Funding Fiduciary Estate Management), a subsidiary of Grupo Elektra, is expected to price a seven-year senior secured amortizing bond today. Price thoughts opened yesterday in the mid 12% area.
Four Latin American corporate issuers priced bonds yesterday. A Canada-incorporated gold miner operating in Colombia, Aris Mining, raised US$450m from a five-year non-call two senior unsecured note, pricing it at par to yield 8%.
Constellation Oil Services, a provider of drilling services for onshore and offshore oil wells in Brazil, priced a US$650m five-year non-call two senior secured note at par to yield 9.375%.
In Argentina, Generacion Mediterranea raised US$141m with a 11% seven-year senior unsecured note priced to yield 11.375%. Telecom Argentina added a US$200m 9.5% senior unsecured 2031 note, priced to yield 8.75%.
Bancolombia announced yesterday the redemption of its 3% senior notes due 2025 and its 4.625% subordinated notes due 2029.
Also yesterday, Edenor announced that it expects to issue US$48.8m aggregate principal amount of new 9.75% senior notes due 2030 in exchange for US$47m in aggregate amount of 9.75% senior notes due 2025. The exchange offer expired on Wednesday.
EQUITIES
All eyes were on Boeing this week as investors waited for the embattled aircraft maker to move forward with a planned US$10bn-$15bn equity raise.
The raise never materialized but banks still managed to price 12 ECM offerings for US$3.7bn of proceeds, including US$817m from new issues.
The week’s highlight was Ingram Micro’s US$409m NYSE IPO, which delivered a nearly 12% debut gain on Thursday.
Septerna also capped an impressive run for biotechs in recent weeks by raising US$288m late Thursday from a twice-upsized Nasdaq IPO.
JP Morgan, TD Cowen, Cantor and Wells Fargo priced the sale of 16m shares in the early-stage biotech at US$18.
To accommodate demand from large mutual funds and other new investors, the banks upped the size of the offering on the morning before pricing from 10.9m shares to 15.3m shares and increased the US$15-$17 marketing range by US$1 to US$18.00 (before a second upsize to 16m shares).
Septerna shares will begin trading on Nasdaq on Friday under the symbol “SEPN”.
Elsewhere, Chinese robotaxi operator WeRide completed its circuitous route to a US capital markets by pricing a long-delayed US$120m Nasdaq IPO late Thursday.
WeRide sold 7.74m ADS, up from 6.45m ADS at launch, at US$15.50 each from a US$15.50–$18.50 range.
German partner Robert Bosch stepped up with a US$100m upfront order (therefore taking most of the shares) and WeRide secured another US$320.5m from a private placement led by the venture fund of Renault Nissan, which was in for US$97m.
Morgan Stanley, JP Morgan and CICC led the transaction.
In August, WeRide had to postpone its IPO as it needed more time to provide additional documentation to regulators.
The ADS are due to trade on Nasdaq under the symbol “WRD”.
WeRide’s perseverance could inspire Peak Resources, whose own US$70m NYSE IPO was also delayed by regulators ahead of pricing late Thursday.
Banks led by Janney Montgomery Scott have extended marketing of 4.7m units of the oil and gas partnership at US$13-$15 into next week.