The US investment-grade corporate primary remains busy with at least six offerings, including another infusion of FIG deals.
Banks always make up a predominant proportion of January supply, but bank issuance in 2025 has been extreme even by lofty historical standards, BMO said in a report today. "For example, with yesterday’s issuance from BMO and PNC, January bank supply now totals $90bn, which is the largest month of bank supply in history."
Over in the high-yield arena, at least two offerings are expected to price today.
After a slow start to 2025 due largely to calendar disruptions, US ECM activity is starting to pick up. Venture Global is on track to price its US$1.9bn NYSE IPO late Thursday, the second IPO of the year.
The economic data slate today offers two data reports, US weekly jobless claims and the Kansas City Fed Manufacturing Survey.
In the IG primary on Wednesday, five offerings in seven tranches were priced totaling US$5.9bn, lifting weekly IG issuance to US$19.15bn and January IG volume to US$157.85bn, according to IFR data. The average new issue concession for the IG deals yesterday was 1.50bp and the average order book was 3.03x subscribed, according to the data. The average move from initial price thoughts to pricing was 25.83bp tighter.
Yesterday’s slate brings the weekly total to US$19.15bn versus expectations coming into the week for US$23bn-$24bn, with the potential for more supply today with neutral risk tone in early trading doing nothing to stand in the way of incremental supply, BMO said.
"For the month as a whole, IG supply now stands at $158.85bn and remains on track to meet or exceed projections coming into the month for approximately $175bn," BMO said.
Despite the extremely strong bank supply year to date, there has been no evidence of any market indigestion, with very strong demand metrics in both primary and secondary markets, BMO said.
No issues were priced in the HY primary yesterday.
The average IG bond spread edged in by 1bp to 81bp on Wednesday and the HY bond spread tightened by 2bp to 259bp, according to ICE BofA data. US yields across asset classes were mixed on Wednesday.
"High grade spreads were approximately 1bp narrower yesterday despite a 0.75bp widening in CDX spreads," BMO said. "The move pushes IG index spreads to their lowest levels of the young year after a modest widening in spreads in the first few weeks was fully retraced."
HIGH GRADE
At least six investment-grade bond offerings are expected to price on Thursday.
Central European utility Orlen is marketing a 10-year senior unsecured note in a 144a/Reg S format.
Ohio-based Fifth Third is selling three-year non-call two senior unsecured notes in both fixed and floating rate, making it the second US regional bank to bring a bond deal this week.
There are two Canadian FIG offerings today from National Bank of Canada and Bank of Nova Scotia. The latter is delivering a 60-year non-call five limited recourse capital note for Additional Tier 1 capital.
Texan insurer American National is in the market for a five-year funding agreement-backed note.
Arcos Dorados announced an offering of a seven-year senior unsecured bond to finance a tender offer for its 2027 note.
LEVERAGE/HIGH YIELD
The primary market for junk bonds is enjoying some activity this morning as two borrowers ready deal pricings.
Cobra AcquisitionCo is out with price talk of 103.00 on a tap of its 12.25% 2029s, which has been upsized to US$75m from US$50m.
Cobra is an indirect holding company of Exeter Finance, which offers dealership financing and subprime auto lending.
Proceeds are going to repay a portion of the outstanding balance on the company's warehouse facilities.
Rivers Enterprise has also set price talk at 6.750%-6.875% on a US$600m eight-year non-call three secured note, tightening from initial thoughts in the low 7% area ahead of pricing today.
The casino operator is raising funding to refinance debt.
STRUCTURED FINANCE
The commercial mortgage sector is expected to take the spotlight, with at least two issues poised to price by the end of the week.
A group of lenders led by Barclays is in the market with a 10-year conduit deal backed by a US$999.7m pool of loans. It is offering a set of publicly offered certificates totaling US$824.5m and two privately offered securities totaling US$46.7m. The US$352.2m Triple A rated tranche has guidance in the 77bp area over US Treasuries.
On the agency side, Freddie Mac is seeking to raise US$630.5m with a five-year multi-family securitization.
As for the asset-backed primary, eight issuers placed their latest deals yesterday, bringing the week's issuance to more than US$8bn.
There are two ABS offerings that may price by Friday: a US$1.42bn fiber network deal from Zayo and a US$200m subprime auto issue from America's Car-Mart.
LATAM
LatAm borrowers continue their march to market with at least two deals expected to price on Thursday.
On the roster today is development bank CAF, which is on course to price a £750m five-year bond at mid-swaps plus 92bp after order books exceeded £2.2bn.
Latin American McDonald's franchisee Arcos Dorados has also released initial price thoughts in the high 6% area on a benchmark seven-year bond ahead of pricing today.
Proceeds are being used to fund a tender for the company's 2027s and for general corporate purposes.
Meanwhile, the pipeline continues to grow after Peruvian miner Compania de Minas Buenaventura announced plans to issue a new seven-year non-call three bond to fund a debt tender. Leads will start marketing the deal on Friday.
Ueno Bank also looks set to come to market after Fitch and S&P assigned BB/BB ratings to an upcoming senior unsecured bond from the Paraguayan bank.
This comes after Brazilian steel company Usiminas landed a US$500m 7.5% 2032 yesterday, pricing it at 98.669 to yield 7.75%. The bond climbed as high as 99.169 on the break, according to MarketAxess data.
EQUITIES
Venture Global is on track to price its US$1.9bn NYSE IPO late Thursday after drastically overhauling the deal terms on Wednesday in response to heavy valuation pushback.
The LNG terminal builder now expects to sell 70m shares at US$23–$27 versus the previous terms of 50m at US$40–$46, a 42% cut to the asking price at the midpoint but only 20% less in proceeds.
Goldman Sachs, JP Morgan and Bank of America told investors the revised offering was covered, with anchor orders at the top of the book.
After a slow start to 2025 due largely to calendar disruptions, US ECM activity is starting to pick up.
Three issuers raised a combined US$715m late Wednesday, with one convertible bond, one marketed follow-on offering and one overnight stock sale.
AST SpaceMobile secured US$400m from a seven-year CB that provides the satellite-based telecom with money for capex and to clean up its balance sheet.
After a two-day wall cross, UBS, Barclays and Bank of America priced the new CB overnight at a 4.25% coupon and a 20% conversion premium versus the price talk of 3.75%-4.25%, up 20%-25%.
AST shares closed Wednesday at US$22.49, putting the conversion price at US$26.99. The company used some of the proceeds to buy a call spread to offset future dilution to prices above US$44.98, double the reference price.
Separately, AST reached agreement with holders of a US$148m principal 5.5% PIK toggle CB to exchange their bonds for 25.8m shares.
Disc Medicine raised US$225m from a follow-on stock sale for the accelerated approval of its treatment for a rare and inherited blood disease.
After one day of marketing, Jefferies, Leerink Partners, Stifel and Cantor priced 4.1m shares at US$55.00, a 9.1% file-to-offer discount.
The offering was upsized from US$200m and structured with pre-funded warrants to help certain existing shareholders manage their holdings.
The rare disease specialist announced earlier this week that the FDA is willing to consider early approval of Disc’s treatment for a rare cause of iron deficiency that causes a painful intolerance to sunlight based on Phase II trial results.
Vertical Aerospace priced an upsized US$90m overnight stock sale that will help keep the EV aircraft builder and former SPAC from running out of cash.
William Blair and Canaccord Genuity priced 15m units – each composed of common stock and two classes of warrants – at US$6, the bottom of the US$6-$6.50 marketing range and a steep 35% discount versus Wednesday’s closing price of US$9.28.
The offering was the London-based, NYSE-listed EV aircraft builder’s first since listing in 2021 through a SPAC merger with Broadstone Acquisition.