The new year of 2025 kicks off in the US investment-grade primary with at least 10 offerings on Thursday as issuers and investors return from the holiday respite.
No offerings are expected in the high-yield or LatAm primaries today.
In terms of what the year ahead might bring, Q1 is set to see several political events, including the inauguration of Donald Trump for a second term as US President on January 20, Deutsche Bank Research said in a report today. In addition, tomorrow will see the new session of Congress begin, in which the Republicans will have a majority in both the House of Representatives and the Senate.
"So for markets and the economy, a big question will be how the new administration moves on new tariffs, and which countries they’re focused on," Deutsche Bank said.
As for the US Federal Reserve and rate cuts, Deutsche Bank said, "headline and core inflation rates are still lingering slightly above the 2% target, and we know that there are potential price pressures in the pipeline, not least from any new tariffs."
"So it’s going to be interesting to see if we do get the additional rate cuts that markets are pricing in, or whether this will be another year (as with the last three) where market expectations prove to be too dovish," Deutsche Bank said.
The economic data calendar kicks off the new year with a handful of releases on Thursday, including weekly jobless claims and the revised December S&P Global Manufacturing PMI.
US Treasury yields edged up after the data and have since continued to rise.
Looking at secondary market activity at the end of the year, the average IG bond spread on Tuesday was unchanged at 82bp and the HY bond spread tightened by 2bp to 292bp, according to ICE BofA data. US yields across asset classes rose on Tuesday.
HIGH GRADE
The US investment-grade bond market kicked off with a parade of fresh high-grade offerings on Thursday. At least 10 deals are expected to price today.
Ford Motor Credit is issuing five and 10-year senior unsecured notes today, while General Motors Financial is targeting the same senior tenors and is also selling a five-year floater.
There is one Yankee FIG offering. Credit Agricole is selling a three-part senior non-preferred transaction. The French lender's offering is split into four-year non-call three and 11-year non-call 10 fixed-to-floating tranches, plus a four-year floater. Private credit lender Ares Capital Corp is also in the market today.
Insurers are contributing to Thursday's supply slate, with deals from Principal Life, MetLife and Athene. There is also some utility issuance from Entergy Louisiana, Duke Energy Carolinas and Dominion Energy South Carolina.
LEVERAGE/HIGH YIELD
Activity in the US high-yield market remains muted on Thursday as the new year begins with no new deal announcements as of early morning.
Elsewhere, in the secondary market, newly issued bonds by media company iHeart are seeing some active trading.
The 9.125% 2029s were changing hands earlier today at a dollar price of 88.75, up from 85.546 on December 30, according to MarketAxess data.
Those senior secured first lien notes were issued as part of a December bond exchange that extended iHeart's maturities by three years and cut its total debt by more than US$440m, according to the company.
STRUCTURED FINANCE
The securitization primary will likely be muted today, with deal-making in the new year slated to begin in earnest next week.
At least two asset-backed issuers are preparing to tap the market in coming days. American car producer General Motors is readying a prime auto loan issue, while fintech firm Oportun is seeking to price a consumer loan offering, according to their filings with the Securities and Exchange Commission.
The upcoming deals will kick off a record-setting year for ABS issuance, according to Bank of America analysts, who projected the sector's supply will hit US$340bn in 2025, up from last year's US$331bn.
LATAM
The primary market for crossborder bonds out of Latin America is off to a slow start to the year as borrowers remain on the sidelines on Thursday.
Brazilian sugar and ethanol company Usina Coruripe is out with a tender offer for its US$300m in outstanding 10% 2027 bonds. The company will buy back the bonds at par if holders tender by an early bird date of January 15.
Citigroup, Itau, Rabo and XP Investimentos are dealer managers on the tender, which is subject to the completion of a real-denominated loan.
In the secondaries, meanwhile, Vista Energy's new 7.625% 2035 was changing hands at a dollar price of 100.949 this morning, up from 99.60 on December 31, according to MarketAxess data.
The bond, which is the Argentine company's debut offering, has been trading just above and below 100.00 since pricing at par on December 4.
Elsewhere, the 6.5% 2027 issued by Mexican state-owned oil company Pemex was trading at 95.63, down from 97.031 on Tuesday.
EQUITIES
Bankers kept busy deep into December, with more than US$1bn raised from two convertible bonds and one common offering priced in the final week before the winter holiday break.
The largest deal was Affirm’s upsized US$800m raise via a new five-year CB.
The buy-now-pay-later company used the money to buy back stock and repurchase a zero-coupon CB that is deep in the money.
Morgan Stanley, Barclays and JP Morgan priced the security at 0.75%, up 42.5% after marketing a US$750m offering at 0.75%-1.25% and 35%-40%.
Affirm used US$250m to repurchase its common shares. It also bought back US$960m of principal on its zero-coupon CB due 2026 for US$892.8m in cash or 93 cents on the dollar.
The other late-year CB came from medtech LeMaitre Vascular, which raised US$150m from a 5.25y security priced at 2.5%, up 30%.
EV charging station builder EVgo also raised US$115m from an overnight stock sale in the last straight equity deal of 2024.
There was no shotgun start to US ECM deal making early Thursday.
Instead, bankers remain focused on restocking the US IPO pipeline, with expectations of launching and pricing deals in mid/late January.
Ascentage Pharma (biotech), Flowco (oilfield services), RedCloud (software) and Venture Global (LNG) all filed publicly in late December and will likely be among the first US IPOs priced in the new year.