A post-Thanksgiving Day lull has settled on the US bond and stock primaries as US markets reopen after the holiday.
The US bond market will close early today at 2:00pm New York time, while NYSE and Nasdaq trading will close early at 1:00pm New York time.
The ECM arena this week saw two IPOs, three follow-ons and one CB sale for total proceeds of about US$1.4bn. Syndicate desks expect the first three weeks of December to be busy.
With no corporate bond offerings today, syndicate desks estimate investment-grade supply of US$25bn to US$30bn next week to start the month of December.
This week saw US$13.7bn of IG issues sold, pushing IG volume to US$98.2bn to end November in the holiday-shortened week. For the year, IG issuance has reached US$1.499trn, moving 2024 into second place for the busiest year on record for IG supply, according to IFR data.
In the high-yield primary, just one issue totaling US$450m was sold this week, lifting November volume to US$9.1bn. For the year to date, HY issuance stands at US$266bn.
The average IG bond spread on Wednesday was 82bp and the HY bond spread was 269bp, according to ICE BofA data. US yields across assets were mixed to unchanged on Wednesday.
For the week ended November 27, Lipper US Fund Flows reported that the all short-intermediate investment-grade debt funds/ETFs net inflow was US$1.856bn and the all corporate high-yield debt funds/ETFs net outflow was US$57.8m. The all domestic equity funds/ETFs net inflow was US$16.28bn and the all non-domestic equity funds/ETFs net outflow was US$1.487bn.
HIGH GRADE
No investment-grade issuers are expected to price new bonds on Friday, as the market prepares for an early finish after the Thanksgiving holiday, when debt and equity markets were closed.
This would be the third trading day this week with no deals. Seven high-grade issuers raised a combined US$13.7bn on Monday, bringing issuance for November to US$98.2bn, according to IFR data.
Investment-grade volume so far this year is about US$1.5trn, already more than the US$1.2trn of deals that priced during all of last year, the data show.
LEVERAGE/HIGH YIELD
The primary market for US high-yield bonds is set for another quiet day as the country extends the Thanksgiving holiday into the weekend.
In the secondary market, bonds issued by Walgreens Boots are seeing some active trading.
Its 4.65% 2046s were changing hands this morning at a dollar price of 63.125 after hitting around 65.70 earlier in the week, according to MarketAxess data.
The pharmacy and healthcare company accessed the junk-bond market in August when it raised US$750m through a five-year non-call two that was priced at par to yield 8.125% as it sought to pay down notes due this year.
That bond was drifting lower in early morning trading but remains above par at 100.30.
STRUCTURED FINANCE
The securitization primary is poised for a quiet day as the bond market reopens for a shortened session after Thanksgiving.
A trickle of deals across asset classes priced this week, raising a combined US$1bn.
Supply activity will resume in earnest next week when dealmakers return from their holiday break.
The CMBS market in particular is bracing for a spate of single-asset single-borrower issues, according to filings with the Securities and Exchange Commission.
LATAM
Uruguay is expected to price a seven-part Samurai bond offering on December 6.
Price thoughts opened yesterday in the 60bp, 70bp, 80bp, 90bp, 100bp, 110bp and 120bp areas over yen mid-swaps for the three, five, seven, 10, 15, 20 and 30-year bonds, respectively.
Daiwa, MUMSS (MUFG-Morgan Stanley) and SMBC are the bookrunners on this Reg S offering.
Argentine oil producer Vista Energy began holding meetings with fixed income investors on Wednesday for a potential benchmark-sized offering of senior unsecured notes of intermediate maturity.
Citigroup, Deutsche Bank, Itau, JP Morgan and Santander have been mandated as joint leads.
EQUITIES
Both NYSE and Nasdaq trading will close early at 1:00pm New York time on Black Friday, bringing down the curtain on a robust month in which the S&P 500 is tracking a 5%-plus gain, which would be its best month since February, if current levels hold.
With that tailwind, US ECM syndicate desks will look to squeeze a solid slate of equity issuance into the first two to three weeks of December, before the Christmas shutdown, as they look to demonstrate good momentum ahead of what could be a much busier 2025.
The past week, interrupted by Thursday’s Thanksgiving Day federal holiday, was inevitably slow.
It still brought two IPO pricings (Pony.ai and Brazil Potash), three follow-ons and one CB sale for total proceeds of about US$1.4bn.
Both IPOs traded down from their offering prices in their opening session on Wednesday, but, given their unusual timing and profile, offered limited insight into broader IPO conditions.
Few IPOs have filed recently to position for a December debut, though ServiceTitan, a software platform for the trades, looks on track to launch its estimated US$500m-$600m Nasdaq IPO as early as next week and is the biggest new issue on the horizon.
In contrast, most prospective debutantes have already pushed their plans into 2025 given that the final months of the year are normally an inopportune time to go public due to the reluctance of big investors to put new money to work and potentially spoil their investment returns.
That leaves syndicate desks to focus for the next few weeks on secondary and CB issuance driven by sponsor monetization and some of the so-called Trump trades that have dominated the psyche of investors in recent weeks. Sectors such as regional banks and REITs have also proved more consistent contributors to ECM volumes in recent times.
One potential constraint on issuers is uncertainty about the rate outlook ahead of the next FOMC meeting on December 17-18, which could reinforce expectations that the central bank will cut interest rates only gradually next year.