The US investment-grade corporate bond primary is right back in the issuance groove Monday morning after a hefty slate of sales last week.
At least 10 IG offerings – featuring a menu of mixed industries – are expected to price today.
In the HY arena, three offerings are expected to price today.
With five days of uninterrupted market sessions this week, the ECM arena is expected to stir and be more active. To that end, Venture Global launched an up to US$2.3bn NYSE IPO early Monday, which is expected to price on Thursday, January 23.
It is also a busy week for economic data, with CPI, PPI and retail sales dominating the charts.
Bank of America Research said in a report today that it expects core CPI inflation of 0.3% month over month for December and sees the year-over-year rate holding steady at 3.3%, while the headline CPI is expected to increase by 0.3% month over month.
"Inflation appears to have stalled moderately above the Fed's target," BofA said.
On Monday, a handful of economic data reports of interest are out, including the New York Fed's Survey of Consumer Expectations.
In the IG primary last week, 83 tranches were priced totaling US$64.2bn, lifting January IG volume to 103 tranches totaling US$80.25bn, according to IFR data. The average new issue concession for the IG deals last week was 3.09bp and the average order book was 2.85x subscribed, according to the data. The average move last week from initial price thoughts to pricing was 27.71bp tighter.
This week’s focus naturally remains on the primary market after last week’s supply set a record for largest supply week in January ever, BMO said. For the month as a whole, IG issuance is off to the fastest start to a year in history, with year-to-date supply already almost halfway to January expectations of US$170bn-$175bn, BMO said.
For this coming week, syndicate desks are projecting approximately US$40bn of IG supply, which is well above average for the third week of the year, BMO said. Since 2016, the third week of January has averaged US$30bn of IG supply, the bank said.
"January is the largest issuance month of the year for banks with January seeing average bank supply of $66bn since 2016," BMO said.
Bank bond supply could pick up this week as banks start releasing earnings reports on Wednesday.
Deutsche Bank Research said in a report today, "In terms of earnings, the kick-off on Wednesday sees JP Morgan, Goldman Sachs and BlackRock report. Bank of America and Morgan Stanley will follow on Thursday."
Last week in the HY primary, four tranches were priced totaling US$3.3bn.
The average IG bond spread on Friday was unchanged for the third consecutive market session at 83bp and the HY bond spread narrowed by 1bp to 281bp, according to ICE BofA data. US yields across asset classes rose on Friday.
"IG index spreads were unchanged in response to Friday’s double whammy of economic data that significantly complicates the timing for the Fed’s next rate cut," BMO said.
HIGH GRADE
The US investment-grade bond market is expected to see at least 10 deals on Monday.
Investors will have their chance to load up on longer-dated debt today, with chipmaker Micron Technology and midstream energy company Plains All American Pipeline issuing 10-year senior unsecured notes. Tractor maker Deere and Berkshire Hathaway-owned utility Eastern Energy Gas are both selling 10 and 30-year bonds.
Two Yankee FIG offerings are coming from Standard Chartered and Cooperatieve Rabobank.
Business development companies are contributing to today's supply, including deals from Apollo Debt Solutions, Blue Owl Technology Finance and Ares Strategic Income Fund.
F&G Annuities & Life is issuing a US$300m five-year funding agreement-backed bond. The deal comes a week after it priced a US$375m 2064 7.3% junior subordinated note in a retail-friendly US$25-par format.
LEVERAGE/HIGH YIELD
The primary market is enjoying a surge of deal announcements on Monday as more junk-rated borrowers come off the sidelines to raise funding.
Three deal pricings are expected today, including an US$800m eight-year non-call three offering from waste services company Waste Pro USA and a US$200m add-on to the 7.25% 2032 issued by E&P company CNX.
Buckeye Partners has also announced a US$500m five-year non-call two unsecured offering, which is expected to price as soon as today. The oil pipeline company is using proceeds to refinance debt.
Elsewhere, vehicle battery maker Clarios, which is backed by private equity firm Brookfield, is out with a US$1.2bn five-year non-call two issue ahead of expected pricing this week.
The deal is part of a larger US$4.5bn-equivalent funding package to pay a dividend to its owners.
W&T Offshore is also marketing a US$350m four-year non-call two secured bond, while Brundage-Bone Concrete Pumping is approaching investors with a US$400m seven-year non-call three bond.
Both issuers are refinancing debt and are expected to price their deals later in the week.
STRUCTURED FINANCE
The asset-backed primary is poised for a heavy week of issuance, with over US$10bn of supply in the pipeline.
The forthcoming ABS supply followed last week's modest volume of US$2.4bn from four issuers, IFR data show.
The auto sector is leading the charge this week with several sizeable transactions. Santander and Hyundai are each looking to place US$1.3bn of auto supply, and CarMax announced a US$1.15bn prime auto loan deal this morning.
In other ABS segments, Verizon plans to price two bonds backed by mobile payment plans: a US$500m three-year issue and a US$250m five-year security. A joint venture between AGCO and Rabobank has been showing investors a US$750m agricultural equipment securitization. Uniti is marketing its US$589m inaugural deal secured by its fiber optic networks.
Meanwhile, the RMBS market is staying active with at least two deals in the market. Lone Star last Friday showed price guidance on its US$299.6m non-QM issue, while a venture between Ares and AmWest Funding seeks to raise US$285.5m via a non-QM securitization.
The CMBS primary is muted as many dealmakers are attending the CRE Finance Council conference in Miami. The annual industry gathering started on Sunday and will wrap up on Wednesday.
LATAM
Mexican REIT Fibra Uno has mandated BBVA and JP Morgan as global coordinators for a two-tranche dollar-denominated benchmark transaction.
The seven and 12-year sustainability-linked senior unsecured bonds have expected ratings of Baa3/BBB-.
The Development Bank of Latin America and the Caribbean (CAF) is expected to price a five-year dollar-denominated benchmark offering tomorrow. Initial price thoughts are in the 90bp area over SOFR mid-swaps.
Bank of America, Deutsche Bank, JP Morgan and Scotiabank are leads on the transaction.
EQUITIES
Venture Global launched an up to US$2.3bn NYSE IPO early Monday, the first in a series of large IPOs expected in 2025.
A syndicate led by Goldman Sachs, JP Morgan and Bank of America is marketing 50m shares in the LNG project developer at US$40-$46 for pricing on Thursday, January 23.
The all-primary offering is smaller than the US$3bn-plus deal investors were expecting, though the final size could change based on the level of investor demand.
The IPO proceeds will support the construction of three LNG terminals, one of which is already being built and whose construction is expected to be funded with cash flows from two operating facilities.
The company estimates the combined cost to build the three LNG plants at roughly US$110bn, though much of that sum will be funded with project financing.
Venture Global is one of only two live deals in the market, including oil field equipment supplier Flowco’s up to US$409m NYSE IPO pricing this Wednesday.
Though US ECM is off to its slowest start in more than a decade, last Thursday’s unexpected federal holiday may have disrupted marketing plans and created pent-up supply that could emerge in the coming weeks.