The US investment-grade primary revved up the issuance machine and nine offerings are expected to price today.
While geopolitical pressures remain, the market today is focused on earnings and has taken in stride for now the escalations in the Russia/Ukraine conflict.
The high-yield primary expects just one issue to price today.
There are no releases on the economic data front today, although four Fed speakers are expected to offer their views on monetary policy and the economy.
The top news today will be Nvidia's earnings.
"They report after the bell in what is likely to be the biggest event of the week," Deutsche Bank Research said in a report today. "With a market cap of $3.61tn and nearly as big as the entire DAX and CAC combined, it's going to be a big event."
The anticipation of this event seemed to pull markets up from their early geopolitical worries, Deutsche Bank said. After those early losses yesterday, markets began to recover as the focus turned to yesterday's results, the bank said.
In the IG primary on Tuesday four issues were priced totaling US$8.65bn, lifting weekly IG issuance to US$19.75bn and November IG volume to US$67.5bn, according to IFR data. The average new issue concession on Tuesday was negative 0.25bp and the average order book was 4.71x subscribed, according to the data. The average progression from initial price thoughts to pricing was 26.13bp tighter.
Currently 2024 is the third busiest IG volume year on record and it is around US$18bn away from surpassing 2021 IG volume, which totals US$1.487trn, to make it the second busiest year on record, according to IFR data. The year 2020 remains the busiest year for IG volume at US$1.791trn, driven by the repercussions of the Covid pandemic.
In the HY primary, three issues were priced totaling US$1.9bn, raising weekly HY supply to US$2.85bn and November HY issuance to US$8.14bn.
The average IG bond spread remained unchanged at 80bp for the fourth consecutive market session on Tuesday and the HY bond spread narrowed by 3bp to 269bp, according to ICE BofA. US yields across assets classes were tighter yesterday.
"IG index spreads were unchanged yesterday and risk sentiment is on firm footing this morning after geopolitical concerns surrounding Ukraine eased somewhat," BMO said.
HIGH GRADE
The US investment-grade bond market is expected to heat up today, with at least nine deals expected to price on Wednesday.
Mobile technology company AppLovin is in the market for its debut issuance. The mobile technology company is issuing a four-part bond to term out its secured loans.
There is another round of FIG offerings from State Street Bank and Trust Company, Principal Life, Commonwealth Bank of Australia and Blackstone Private Credit Fund.
There is a 10-year green bond offering from sustainable packaging company Smurfit Westrock.
Mexican phone tower operator Sitios Latinoamerica is issuing a five-year senior unsecured note. Meanwhile, the US financing vehicle for UK oil company BP is selling a three-part deal. The transaction includes a new five-year and taps of its 5.017% 2027 and 5.227% 2034 notes.
A group of Adani Green Energy subsidiaries is marketing a new US dollar senior secured bond.
LEVERAGE/HIGH YIELD
Junk-rated borrowers continue to access the primary market before an expected slowdown next week when the US celebrates its Thanksgiving holiday.
PRA Group has set initial price thoughts in the 102.50 area on a US$100m add-on to its 8.875% 2030s ahead of expected pricing today.
Those bonds were trading as high as 105.25 on Tuesday, according to MarketAxess data.
The financial services company is using the proceeds to repay some outstanding borrowing under a revolver.
STRUCTURED FINANCE
Dealmakers are wending their way through this week's asset-backed calendar after five issues raised more than US$5bn yesterday.
There are at least another five issues in the market, which are expected to raise over US$3bn. The largest of these deals is a US$1.3bn green bond debut from data center firm Cloud Capital.
Another first-time issuer in the mix is aviation lender volofin, which is seeking to raise US$533.9m via an aircraft lease offering.
In the CMBS market, a group of lenders is looking to sell US$740.7m of publicly offered certificates and US$28.1m of privately offered notes, which are backed by a US$876.02m pool of five-year fixed-rate loans.
LATAM
Mexico-based telecom Sitios Latinoamerica is expected to price today a benchmark-sized senior unsecured dollar-denominated five-year bond offering. Initial price thoughts are in the low 200bp area over US Treasuries.
Bank of America and Citigroup are global coordinators and joint bookrunners.
EQUITIES
Michael Saylor's MicroStrategy secured another US$2.6bn from the sale of a record-setting and massively upsized five-year CB, its fifth such offering this year as the company continues to aggressively buy bitcoin.
After a day of marketing, Barclays, Citigroup, TD Cowen and Cantor priced the high-flying bitcoin hoarder’s new CB at a 0% coupon and 55% conversion premium.
The offering was upsized by nearly 50% from US$1.75bn at launch.
The final terms represented the most issuer-friendly outcome since Peloton Interactive priced a $1.25bn zero-coupon CB with a 65% conversion premium in 2021.
Mara, a one-time bitcoin miner turned owner formerly known as Marathon Digital, held the title for most aggressive CB of 2024 for all of one day with the pricing Tuesday night of an upsized 5.25-year, put-three CB at a zero-percent coupon and a 42.5% premium.
Sponsor monetization has taken a back seat to more glitzy bitcoin financings this week even though the post-earnings season window is normally an active period for private equity firms selling stock.
Still, Carlyle surfaced late Tuesday with a US$294m block sale of QuidelOrtho shares, the week’s only registered sponsor block in US ECM so far.
Goldman Sachs off loaded its purchase of 8.3m shares of the diagnostics equipment maker at US$35.60, the bottom of the US$35.60-$36.60 reoffer range and a 7.7% discount to Tuesday’s closing price of US$38.58.
Elsewhere, DT Midstream secured US$366.6m of equity funding for its purchase of three natural gas pipelines from Oneok Partners.
Barclays priced 3.63m shares at US$101.00, a 2% discount from Tuesday’s closing price of US$103.03 and an increase from a US$300m proceeds target.
The Detroit-based pipeline owner launched the deal post-close, soon after announcing plans to buy 100% interest in three natural gas pipelines from Oneok for US$1.2bn in cash.
DT is funding the balance of the acquisition costs with debt, including US$650m of new senior secured notes and a draw from its revolver.
As the IPO market begins to shut down for 2024, a handful of aspirants are still looking to list publicly, including two US deals pricing tonight and one in Canada.
Pony.ai upsized its Nasdaq IPO by a third to US$260m ahead of pricing late Wednesday, pointing to wider interest in China-to-US offerings.
The Chinese robotaxi operator is now looking to sell 20m American depositary shares, up from 15m shares at launch, but is sticking with the original US$11-$13 price target.
Goldman Sachs, Bank of America, Deutsche Bank and Huatai Securities told accounts early Wednesday that the offering was covered but did not provide any further details about the expected pricing outcome.
Brazil Potash, a Canadian owner of land in the Amazon basin, is also on track to price a circa US$75m NYSE IPO after the close.
Canadian retailer Groupe Dynamite is also pricing its up to C$329m TSX IPO late Wednesday.