Following a robust day of offerings, the US investment-grade primary continues to churn out issues on Tuesday, with at least eight deals slated for sale.
The high-yield primary is looking for two offerings to price today.
The ECM arena remains active with equity and convertible bond deals. Monday night’s biggest trade came from PG&E, which raised US$2.4bn from a dual-tranche common stock and mandatory convertible offering.
Economic data is sparse today, with just the JOLTS report due in midmorning and two Fed speakers slated to make appearances today.
On Monday, 11 IG issues were priced totaling US$7.45bn to kick off the month of December, according to IFR data. Year-to-date IG issuance stands at US$1.507trn, the second busiest year for IG supply on record. The average new issue concession on Monday was 0.08bp and the average order book was 4.89x subscribed, according to the data. The average progression from initial price thoughts to pricing was 27.20bp tighter.
In the HY primary yesterday, one offering was priced totaling US$600m. Year-to-date issuance is US$266.49bn.
The average IG bond spread edged in by 1bp to 81bp on Monday and the HY bond spread narrowed by 4bp to 268bp, according to ICE BofA data. US yields across asset classes were mixed on Monday.
HIGH GRADE
At least eight investment-grade issuers are expected to price bonds on Tuesday, after 11 issuers raised a combined US$7.45bn yesterday.
Today’s offerings include a two-part sale of junior subordinate notes from CVS Health. The deal comprises 30.25-year non-call 5.25 and 30-year non-call 10 fixed-rate reset securities. Part of the proceeds will be used to fund a tender offer.
Meanwhile, aircraft lessor Avolon is out with fixed and floating-rate notes with a long three-year tenor and a long five-year fixed tranche. Coterra Energy is offering 10s and 30s, Public Service Co of Oklahoma is out with a 10-year, RGA is preparing a seven-year, and Sammons Financial is marketing a five-year.
At the same time, Canadian Natural Resources is selling fives and 10s, and System Energy Resources is marketing 10s.
LEVERAGE/HIGH YIELD
The pace of issuance in the US high-yield market is picking up as a string of junk-rated borrowers ready deals for this week.
Iron Mountain is out with a US$750m eight-year non-call three bond ahead of expected pricing this afternoon. The information management company will use proceeds to repay borrowings under a revolver.
Also on the roster today is a deal from US Acute Care Solutions, which is seeking to raise US$200m through an add-on to its existing senior secured 2029s.
Proceeds will be used to redeem a portion of a preferred equity instrument and pay interest on those securities.
Planet Financial has also joined the pipeline with a US$400m five-year non-call two issue that is expected to price on Thursday.
The lender has set initial price thoughts of 10.50%-10.75% on the deal and will use proceeds to repay debt.
Elsewhere, packaging company Veritiv is preparing a US$550m add-on to its 10.5% senior secured 2030s, as part of an effort to fund its acquisition of Orora Limited. Pricing is scheduled for Friday.
STRUCTURED FINANCE
Activity in the securitization primary is robust this week. Yesterday, Porsche announced a US$750m prime auto loan securitization, while Pagaya seeks to sell a US$492m consumer loan offering.
In the CMBS market, there are two five-year conduit issues for sale this week: a US$892.2m deal issued from a BMO shelf and a US$783.3m offering via a Barclays vehicle.
As for the RMBS sector, Lone Star is in the market with its latest non-QM issue, which is expected to raise US$409.4m.
LATAM
Amazon Conservation DAD, a special purpose vehicle incorporated under the laws of Ireland, has mandated Bank of America as sole bookrunner to arrange a series of global calls starting today for a US$1bn 144a/Reg S bond offering with an expected 18-year final maturity.
Ecuador, meanwhile, has announced an offer to buy back notes maturing between 2030 and 2040.
The City of Buenos Aires today initiated meetings with fixed-income investors for a potential benchmark-sized bond offering of intermediate maturity. Bank of America, Deutsche Bank, JP Morgan and Santander are joint bookrunners.
The city yesterday commenced a cash tender for up to US$550m of its 7.5% notes due 2027.
EQUITIES
ServiceTitan early Tuesday launched a Nasdaq IPO that will raise up to US$501m, marking only the third US software debut this year and probably the last IPO of size in 2024.
A syndicate led by Goldman Sachs and Morgan Stanley expects to price the sale of 8.8m Class A shares, or less than 10% of the subscription software platform for the “trades,” at US$52-$57 after the market closes on Wednesday, December 11.
ServiceTitan, whose platform helps electricians, roofers, plumbers and landscapers manage advertising and job scheduling, generate invoices and process payments, grew revenue 24% in its most recent quarter and generated US$685m of revenue in the 12 months ended July 31 2024.
At the top of the range, ServiceTitan would command a fully diluted market cap of around US$5.8bn, well below its peak valuation of US$9.5bn following a US$200m funding round in 2021.
Also early Tuesday, Live Nation Entertainment kept the strong momentum going in equity-linked issuance by launching a US$1bn CB to help finance the repurchase of a CB maturing next year and to pay down bank debt.
A syndicate led by Citigroup, JP Morgan, Goldman Sachs and Morgan Stanley is marketing the Live Nation offering at a 2.875%-3.375% coupon and 37.5%-42.5% conversion premium for pricing after the market closes on Tuesday.
CBs are dominating ECM activity in early December.
In Monday night’s biggest offering, PG&E raised US$2.4bn from a dual-tranche common stock and mandatory convertible offering, though the California-based utility ended up selling less common and more of the mandatory than initially expected.
After a day of marketing, a syndicate led by JP Morgan, Barclays and Citigroup priced the sale of 48.66m shares at US$20.55, a 5% file-to-offer discount, for proceeds of US$1bn. This was less than the US$1.2bn target at launch.
PG&E also raised an upsized US$1.4bn from the mandatory sale (up from US$1.2bn at launch).
The same syndicate priced the mandatory at a 6% dividend and 25% conversion premium, the issuer-friendly ends of the 6%-6.5%/20%-25% price talk. Investors were attracted to the mandatory’s high dividend given that PG&E currently pays only a modest common stock dividend.
Bankers also priced more CBs from bitcoin and crypto-related companies whose stock prices surged following the presidential election last month.
Returning for the second time in two weeks, bitcoin miner/hoarder Mara raised US$850m from the sale of another zero-coupon CB.
After a day of marketing, JP Morgan and Barclays priced the 6.5-year security with a 40% conversion premium, the bottom of the 40%-45% price talk.
Core Scientific, a bitcoin miner and high-performance computing data center operator, raised US$550m from the one-day marketed sale of a 6.5-year zero-coupon CB.
JP Morgan and RBC Capital Markets upsized the offering from US$500m at launch before setting the final terms at a 0% coupon and 42.5% conversion premium versus the marketed talk of 0% and 37.5%-42.5%.
Equity Bancshares, the holding company for Kansas-based Equity Bank, raised US$80m from an overnight stock sale to fund growth. Stephens acted as sole bookrunner.
Looking ahead, one of 2024’s best performing IPOs, sporting goods maker Amer Sports, launched an US$888m first-time follow-on sale whose proceeds will be used to retire debt. The offering will price after the market closes on Wednesday.
Cancer specialist Revolution Medicines also launched a day of marketing to raise US$600m from a stock sale.