The US corporate bond primaries are quiet today as the week wraps up after busy sessions of issuance and maneuvering through the ructions of politics and policy from a new administration in Washington, DC.
Over in structured finance, the market is stirring today, with at least two offerings to price as it finishes a week that has already seen 10 issuers raise over US$8bn.
The ECM arena saw some action on Thursday as Venture Global priced its NYSE IPO for proceeds of US$1.75bn. Venture priced the year’s biggest offering so far and accounted for more than half the US$3.1bn raised in US ECM this week. Hong Kong-listed Ascentage Pharma also raised US$126m late Thursday from a Nasdaq IPO.
The economic data calendar offers a mix of reports this morning, with the last release at 10:00am New York coming from the January University of Michigan Survey of Consumers. There are no Fed speakers scheduled because of the blackout period ahead of next week's FOMC meeting.
The CME FedWatch Tool this morning forecasts a 99.5% probability that the FOMC will not cut the fed funds rate on January 29, leaving it in its current range of 425bp-450bp.
US Treasury yields are lower to flat this morning, with the 10-year benchmark note yield hovering around 4.64%.
In the IG primary market on Thursday, six offerings were priced totaling US$5.1bn, pushing weekly issuance in the holiday-shortened week to US$24.25bn and January volume to US$162.95bn, according to IFR data. Yesterday's offerings bring the weekly total mostly in line with syndicate IG supply expectations coming into the week, BMO said in a report today.
The average new issue concession for the IG deals on Thursday was 3.67bp and the average order book was 2.65x subscribed, according to the data. The average move from initial price thoughts to pricing was 28.375bp tighter.
The slate of sales this week was dominated by banks big and small, adding to the FIG issuance already in the market for this year.
In the HY arena, two issues were priced totaling US$675m, lifting volume for the week to US$1.205bn and January issuance to US$8.33bn.
The average IG bond spread narrowed by 1bp to 80bp on Thursday and the HY bond spread widened by 2bp to 261bp, according to ICE BofA data. US yields across asset classes rose yesterday.
"IG index spreads narrowed 1bp yesterday and are now 2bp tighter on the week as President Trump’s initial agenda remains more market friendly than market participants feared ahead of inauguration," BMO said. "Volume metrics were extremely strong once again yesterday, with secondary IG market volumes almost 70% above the Thursday average over the past year with client activity skewed sharply toward buying."
For the week ended January 22, Lipper US Fund Flows reported that the all short-intermediate investment-grade debt funds/ETFs net inflow was US$914.72m and the all corporate high-yield debt funds/ETFs net inflow was US$1.354bn. The all domestic equity funds/ETFs net outflow was US$1.360bn and the all non-domestic equity funds/ETFs net inflow was US$22.94m.
HIGH GRADE
The US investment-grade bond market is not expected to draw fresh offerings today after a total of six issuers priced deals yesterday.
On Thursday, Central European utility Orlen brought the biggest offering, selling a US$1.25bn 10-year senior unsecured note at US Treasuries plus 155bp.
There was plenty of FIG issuance yesterday too, with three banks coming to market. Bank of Nova Scotia sold a US$1bn 60-year non-call five limited recourse capital note eligible for Additional Tier 1 capital. National Bank of Canada and Fifth Third Bancorp both printed short-term senior unsecured paper.
The other two borrowers were Arcos Dorados and American National Insurance.
LEVERAGE/HIGH YIELD
The primary market for junk bonds is set for a quiet Friday, with no new deal announcements as of early morning.
Yesterday saw some activity in another fairly quiet week. Cobra AcquisitionCo, the indirect holding company of auto lender Exeter Finance, priced an upsized US$75m add-on to its 12.25% 2029s at 103.00.
The bond changed hands at 106.25 on January 15, according to MarketAxess data.
Casino operator Rivers Enterprise also raised US$600m through an eight-year non-call three offering that priced at par to yield 6.25%, inside price talk of 6.750%-6.875%.
STRUCTURED FINANCE
At least two asset-backed offerings are expected to price today, wrapping up an active week for the sector, with 10 issuers raising over US$8bn.
America's Car-Mart this morning launched its US$200m two-part subprime auto securitization. The US$150.8m Single A rated money-market tranche is expected to price at US Treasuries plus 120bp.
GoodLeap yesterday came out with price guidance on its US$325m three-year home improvement loan offering. The US$291.5m Single A rated class is assessed at US Treasuries plus 120bp-130bp.
In the CMBS market, a joint venture between Berkshire Residential and Limekiln Real Estate released its first CRE CLO issue of the year, which will fund a group of multifamily debt totaling US$1.27bn. The US$673.1m Triple A rated three-year floating-rate tranche has guidance in the 135bp area over SOFR.
As for the RMBS sector, at least one deal is slated for sale today. Pimco is expected to complete its US$351.6m non-QM offering. The US$278.3m two-year Triple A rated security has guidance of US Treasuries plus 120bp-125bp.
LATAM
The pipeline for Latin American US dollar bonds continues to grow as more corporates and banks from the region prepare to issue deals in coming weeks.
Peru's Interbank and Brazilian waste recovery company Ambipar are the latest borrowers to announce deals.
Interbank is preparing a subordinated 144A/Reg S bond offering and has mandated Goldman Sachs, JP Morgan and Santander to coordinate investor calls through January 25, according to a local filing.
Moody's and S&P have respectively assigned Baa3/BB+ ratings to the US$300m-$400m 10.25-year non-call five offering, which qualifies as Tier 2 capital by the local regulator.
Meanwhile, Ambipar is preparing a bond to fund a tender for its 9.875% green notes due 2031, which is being managed by Bank of America, Banco Bradesco and UBS.
The new green bond will have an up to US$500m size and an intermediate tenor, according to Fitch. The deal is expected to carry BB-/BB- ratings by S&P and Fitch.
EQUITIES
Venture Global regrouped after taking a dramatic valuation haircut earlier in the week to price its NYSE IPO at the midpoint of the revised marketing range for proceeds of US$1.75bn.
A syndicate led by Goldman Sachs, JP Morgan and Bank of America late Thursday priced the sale of 70m shares, or less than 3% of the LNG exporter and terminal developer, at US$25 versus the US$23-$27 range.
The offering closed north of 6x covered, with the top 25 accounts taking 75% of the shares. Allocations were highly concentrated, a banker said.
Venture Global resolved a difficult situation by cutting its asking price by about 40% from US$40-$46 earlier in the week (though the company lifted the number of shares in the offering from 50m to partly compensate for reduced proceeds).
Investors had initially balked at paying a substantial premium to close comp Cheniere Energy and questioned management’s bullish outlook.
Venture Global shares will begin trading on the NYSE later Friday under the symbol “VG”.
Despite raising substantially less in proceeds than planned, Venture still priced the year’s biggest offering so far and accounted for more than half the US$3.1bn raised in US ECM this week.
Hong Kong-listed Ascentage Pharma also raised US$126m late Thursday from a Nasdaq IPO.
The Chinese cancer specialist sold around 7.3m ADSs at US$17.25, or a 19% discount to its currency-converted/equivalent closing price in Hong Kong.
The offering was multiple times oversubscribed, with a strong mix of Asian and US investors and with the top 10 taking 70% of the ADSs.
Each ADS represents four Hong Kong shares.
JP Morgan and Citigroup led the offering.
The week’s pricing activity was rounded out with a pair of convertible bonds from B2Gold (an upsized US$400m) and Semler Scientific (US$85m).
Sunrise Realty Trust failed to price a circa US$75m follow-on stock sale as planned on Thursday night and pushed the offering into next week.