The US investment-grade corporate primary is firing on all cylinders this Monday morning with at least 24 offerings expected to price today to kick-start the first full week of the new year.
The high-yield primary remains dormant for the time being, with no offerings expected to price today and none priced to start 2025 last week. The structured finance primary will see some action today with an auto deal. In Latin America, Mexico revs up the SSA market with a new sovereign offering.
Major US stock exchanges and federal offices will be closed on January 9 in observance of a National Day of Mourning for former President Jimmy Carter. US bond markets have an early close at 2:00pm New York time that day.
While the ECM funding window is wide open, with stocks near record highs, the state funeral for President Carter on Thursday may disrupt the timing of fundraising plans for some companies.
The IG primary market this week is expected to see about US$50bn-$55bn of supply, according to BMO in a report today.
"Over the past five years, first week supply has ranged between $54.5bn (2021) and $65.3bn (2020) with an average of $59.6bn," BMO said.
For 2025, BMO said, it could be one of the fastest starts to any new year in history with a total of US$66bn-$71bn of IG supply expected by the end of the first full week if last week is added and this week’s IG supply expectations are realized.
Syndicate desks are calling for US$170bn-$175bn in IG supply for January, BMO said. "If realized, that would effectively match 2017 ($174.9bn) as the second-heaviest January in our data, trailing only 2024’s $194.5bn."
While markets have struggled since Christmas, a recovery began on Friday, with the S&P 500 snapping a run of five consecutive daily declines with a 1.26% advance, Deutsche Bank Research said in a report today.
"One factor helping to turn sentiment around on Friday was strong economic data out of the US, with the ISM manufacturing print up to a 9-month high of 49.3 in December (vs. 48.2 expected)," Deutsche Bank said. "Moreover, the new orders component ticked up to an 11-month high of 52.5."
Another critical development last Friday was the reelection of Mike Johnson as Speaker of the House of Representatives in the new US Congress.
"The vote was also in focus because it was seen as the first test of how cohesive the narrow Republican majority would prove, and whether they’ll be able to enact Donald Trump’s second-term agenda, with his inauguration now just two weeks away," Deutsche Bank said.
On rates, Deutsche said, recent comments from Fed officials have implicitly sounded quite cautious about the scale of further easing, which echoes the Fed’s hawkish shift in its December dot plot, which signaled only 50bp of cuts for 2025.
This morning, US stocks opened sharply higher while US Treasury yields were elevated, with the 10-year benchmark note yield hovering around 4.62%.
In the week ahead, the US jobs report on Friday will be one of the key economic data releases that markets will keenly focus on as they step into the new year. For today, the slate features two economic data releases and a Fed speaker.
Bank of America Research said in a report today that it expects nonfarm payrolls to rise by 175,000 in December, while the consensus forecast is for 153,000 jobs.
"We think job growth in December will be much softer than November's 227k print because the latter included payback for October's hurricane disruptions, particularly in manufacturing. Investors should also keep an eye on revisions, which have been large in recent months due to low response rates," BofA said.
Last week, 2025 started with 12 IG issues priced in 20 tranches totaling US$16.05bn of supply, with 10 of those offerings priced on Thursday, according to IFR data. The average new issue concession for the deals last week was 3.0bp and the average order book was 2.44x subscribed, according to the data. The average move from initial price thoughts to pricing was 24.26bp tighter.
The IG bond spread remained unchanged at 83bp on Friday and the HY bond spread narrowed by 7bp to 281bp, according to ICE BofA data. US yields across asset classes were mixed on Friday.
In the last two weeks, high grade spreads traded in a narrow 2bp range between 81bp and 83bp on the ICE Corp Index to end the year and sit in the first percentile of the 25-year range to begin the first "real" week of 2025, BMO said.
For the week ended January 1, Lipper US Fund Flows reported that the all short-intermediate investment-grade debt funds/ETFs net outflow was US$644.29m and the all corporate high-yield debt funds/ETFs net outflow was US$396.23m. The all domestic equity funds/ETFs net inflow was US$2.943bn and the all non-domestic equity funds/ETFs net outflow was US$1.589bn.
HIGH GRADE
The US investment-grade bond market is getting off to a brisk start on Monday, with 24 high-grade transactions expected to price today, the second highest number of deals for a single session on record, IFR data show.
There is a large slate of Yankee deals from BNP Paribas, Canadian Imperial Bank of Commerce, Societe Generale, Hyundai Capital America, National Australia Bank, Toyota, MUFG and UBS.
Tractor maker John Deere and heavy equipment producer Caterpillar are issuing bonds via their financing arms.
Global building materials business CRH is issuing a three-part senior unsecured offering a fives, 10 and 30s through two different entities, meaning the trade counts as two separate deals. Semiconductor company Broadcom is marketing three, five and seven-year senior unsecured bonds.
Insurers Reinsurance Group of America, Corebridge Financial, Lincoln National and Jackson National Life Insurance are selling funding agreement-backed notes. Utility Connecticut Light and Power is looking to price a US$400m five-year first mortgage bond.
Aviation leasing company AerCap is selling three and seven-year senior unsecured notes, while energy company Williams is marketing 10 and 30-year bonds. JBS, Sixth Street Lending Partners, EDF and Southern California Edison are also selling fresh paper today.
LEVERAGE/HIGH YIELD
The primary market for US high-yield bonds remained inactive on Monday, with no new announcements as of earlier this morning.
In the secondary, the 6.65% 2037 issued by US Steel was trading higher this morning at a dollar price of 98.562, up from 97.746 on Friday afternoon.
The bond is performing well despite President Joe Biden's decision last week to block Nippon Steel's proposed US$14.9bn purchase of the company.
Nippon and US Steel announced this morning that they have filed multiple lawsuits in response to what they called wrongful interference in the acquisition.
STRUCTURED FINANCE
The asset-backed primary is warming up as dealmakers return to work from their holiday breaks.
The auto sector is out of the gate to lead the first wave of supply for 2025. General Motors started marketing a US$1.29bn prime auto securitization this morning.
Other upcoming auto deals are slated to come from Hyundai, CarMax, DriveTime, Mercedes Benz, Lendbuzz and Global Lending Services, according to their recent filings with the Securities and Exchange Commission.
LATAM
Continuing a well-established Latin American tradition, Mexico is set to open the region's bond market with the pricing of a three-part offering today. Initial price thoughts are in the 210bp, 260bp and 290bp areas over US Treasuries for the five, 12 and 30-year notes, respectively.
Goldman Sachs, Bank of America, JP Morgan, Scotiabank and SMBC are joint bookrunners.
JBS USA, the US-based subsidiary of Brazilian multinational JBS, is also in the market today, expecting to price a two-part offering. Price thoughts for the 10 and 30-year bonds are in the 165bp and 195bp areas over US Treasuries, respectively. BB Securities, BBVA, BMO, Bradesco, BTG Pactual, Citigroup, Mizuho, RBC and Santander are the bookrunners.
EQUITIES
No common stock or structured equity deals launched early Monday and none have launched yet this year, though ECM syndicate desks could pick up the pace as investors get back to their seats.
Though the funding window is wide open, with stocks near record highs, the state funeral for former US President Jimmy Carter on Thursday may disrupt the timing of fundraising plans for some companies.
Major US stock exchanges and federal offices, including the SEC, will be closed on January 9 in observance of a National Day of Mourning.
Meanwhile, MicroStrategy revealed plans last week to sell up to US$2bn of perpetual preferred stock to help fund new bitcoin investments, pivoting from the string of convertible bonds the serial issuer sold last year.
The preferred offering is separate from the US$21bn of MicroStrategy common stock currently being sold at market prices under an at-the-market equity program.
In addition to the massive ATM, MicroStrategy has pledged to raise another US$21bn via debt, convertible bonds and preferred stock over the next three years to help fund its new investments in bitcoin.