The US investment-grade and high-yield corporate primaries are quiet on Friday as the markets slow ahead of the Thanksgiving holiday next week.
Markets will be closed in the US on Thursday and US bond markets will have an early close at 2:00pm New York time on Friday, while stocks will see a full session.
In the ECM arena this week, crypto-related companies raised US$4.6bn from four convertible bond offerings, representing more than three-quarters of this week’s overall US ECM volume of US$5.8bn.
Economic data for Friday sees two releases that will be some of the more significant of the week's data menu, with the preliminary November S&P Global PMIs and the revised November University of Michigan Survey.
On Thursday, four IG offerings were priced totaling US$4.2bn, pushing weekly IG issuance to US$36.75bn, exceeding syndicates' IG supply expectations of up to US$35bn for the week. The average new issue concession on Thursday was 1.17bp and the average order book was 4.89x subscribed, according to the data. The average progression from initial price thoughts to pricing was 30.54bp tighter.
The IG volume for November shifted up to US$84.5bn and issuance year to date reached US$1.486trn, according to IFR data. Currently 2024 is the third busiest IG volume year on record, and it is around US$1bn away from surpassing 2021 IG volume, which totals US$1.487trn, to make it the second busiest year on record, the data show. The year 2020 remains the busiest year for IG volume at US$1.791trn, driven by the repercussions of the Covid pandemic.
One issue was priced in the HY primary totaling US$360m yesterday, pushing weekly volume to US$3.36m and November issuance to US$8.65bn.
The average IG bond spread was unchanged at 81bp on Thursday and the HY bond spread narrowed by 6bp to 261bp, according to ICE BofA data. On Thursday, US yields across asset classes were mixed.
"High grade spreads were little changed yesterday despite the sharp rally in equities," BMO said. "For the week as a whole, one of the two IG indices we track is 1bp wider while the other is unchanged heading into the week’s final session."
For the week ended November 20, Lipper US Fund Flows reported that the all short-intermediate investment-grade debt funds/ETFs net inflow was US$4.596bn and the all corporate high-yield debt funds/ETFs net inflow was US$459.3m. The all domestic equity funds/ETFs net inflow was US$6.922bn and the all non-domestic equity funds/ETFs net outflow was US$4.128bn.
"Inflows notably accelerated for HG, more so from ETFs than funds this past week ending on November 20," Bank of America Research said in a report late yesterday.
BMO noted that demand for corporates from investors remains extremely healthy.
"Specifically, IG funds saw a $4.6bn inflow, which is the largest weekly inflow for IG funds since January 2023," BMO said.
HIGH GRADE
No new investment-grade bond offerings are expected to price on Friday, following yesterday's four deals.
Thursday saw energy issuance from DT Midstream and Expand Energy, with both borrowers targeting the 10-year area of the yield curve.
JPMorgan delivered the biggest offering Thursday. The US money-center bank raised US$2.5bn from a 21-year non-call 20 senior holdco bond transaction, pricing the deal at Treasuries plus 82bp.
Brookfield Infrastructure Finance offered corporate hybrid paper to investors. The issuer printed a US$300m 6.75% 30-year non-call five subordinated note.
LEVERAGE/HIGH YIELD
The primary market for US high-yield bonds looks set for a quiet Friday after borrowers raised more than US$3bn this week.
In the secondaries, Select Medical’s new 6.25% 2032 has drifted higher to trade yesterday at a dollar price of 100.375 after pricing at par earlier this week, according to MarketAxess data.
The operator of critical illness hospitals raised funding in the bond and loan markets this week to attend to upcoming maturities.
STRUCTURED FINANCE
The asset-backed primary is wrapping up a busy week, with the sector topping the US$300bn mark on its way to setting a record annual volume.
Buy-now-pay-later lender Affirm is slated to price a US$698.9m consumer loan offering this morning, adding to the US$7.5bn of supply that has landed since Monday.
Also in the ABS market are data center acquisition firm Cloud Capital with a US$1.3bn green bond and fintech firm Upgrade with a US$299.1m consumer loan deal.
The RMBS sector also had an active week during which seven issuers raised more than US$2.6bn.
Elsewhere, the CMBS market has seen two deals bringing in nearly US$1.4n since Monday.
LATAM
Honduras raised US$700m yesterday from its inaugural labeled bond offering. The 10-year sustainability bond priced at par at a yield of 8.625%.
Citigroup and Santander were the bookrunners.
The government of Bahamas has executed a debt-for-nature swap that will unlock an expected US$124m of new cash funding for marine conservation, the country's ministry of finance announced today.
The sovereign issuer obtained a US$300m loan from Standard Chartered Bank that benefited from credit enhancements from the Inter-American Development Bank and two private sector companies, and it is using the proceeds to repurchase more expensive outstanding global bonds and other external commercial debt.
EQUITIES
Bitcoin mania found willing accomplices in the structured equity market this week, overshadowing just about everything else in US ECM.
With bitcoin miner Bitdeer Technologies pricing a US$360m convertible bond late Thursday, crypto-related companies raised US$4.6bn from four CBs this week, representing more than three-quarters of this week’s overall US ECM volume of US$5.8bn.
The most spectacular was a US$3bn raise from Michael Saylor’s MicroStrategy, which saw its shares get marked down by 16.2% in yesterday’s trading session following a short report from Citron Research.
Mara kicked off the rush of bitcoin financings with a US$850m CB on Monday, while billionaire Mike Novogratz’s Galaxy Digital secured US$350m from a CB financing on Wednesday.
Sponsor activity was limited to Carlyle’s sale of its remaining stake in QuidelOrtho (US$296m), though backers of high-flyers AppLovin (US$1.2bn) and Cava (US$1.1bn) opted to sell in unregistered block trades (which are not reflected in the weekly totals).
Office REIT SL Green Realty raised US$400m from a rare overnight stock sale late Thursday to help fund new investments amid a revival for Manhattan office properties.
Wells Fargo, JP Morgan, TD Securities, BMO Capital Markets and Deutsche Bank priced 5m shares at US$79, within the US$76.80-$79.15 marketing range and slightly below the closing price of US$79.15.
Abacus Life, an alternative asset manager that specializes in buying life insurance policies, rounded out the week’s ECM activity by raising US$100m from a mixed primary and secondary follow-on stock sale.
A syndicate led by Piper Sandler, TD Securities, KKR Capital Markets, B Riley Securities and SG Americas Securities priced 12.5m Abacus shares (10m primary, 2.5m secondary) at an US$8 fixed price, 8.2% below Thursday’s closing price of US$8.71.