The US investment-grade primary is idle today as the Federal Reserve ends its FOMC meeting with a decision on rates.
In the high-yield primary, however, two issues are expected to price today, including an offering from media company Sinclair Television. The structured finance primary is also active, with at least four asset-backed offerings on track to price this week.
In the ECM arena, the three life sciences IPOs are still set to price this week, while Smithfield Foods made its Nasdaq IPO debut on Tuesday.
The big story of the day remains the Federal Reserve, which concludes its two-day FOMC meeting today and will announce its rate decision at 2:00pm New York time and then hold a press conference with Fed Chairman Jerome Powell shortly thereafter. The CME FedWatch Tool forecasts a 99.5% probability that there will be no change to the fed funds rate.
"Market participants will be focused on Chair Powell’s characterization of the economic situation during his press conference for clues as to whether the cuts foreshadowed in the December SEP remain base case," BMO said in a report today. "In addition, we will be watching closely for any indication that the FOMC is turning its attention toward ending balance sheet runoff."
Elsewhere, economic data reports today are down to just one, with the Advance Economic Indicators report slated for release at 8:30am.
In the IG primary market on Tuesday, five issues were priced totaling US$10.75bn, lifting weekly volume to US$11.6bn and January issuance to US$174.55bn, according to IFR data. The average new issue concession for the IG deals on Tuesday was 0.50bp and the average order book was 3.21x subscribed, the data show. The average move from initial price thoughts to pricing was 30.86bp tighter.
The bulk of yesterday's offerings were from banks, including Capital One, pushing total bank supply for the month to US$100bn, which is a record for a single month, according to BMO.
Over in the HY arena, three issues were priced totaling US$2.81bn, bringing weekly issuance to US$3.125bn and January volume to US$11.455bn, according to IFR data.
The average IG bond spread remained unchanged at 81bp on Tuesday and the HY bond spread was unchanged at 266bp, according to ICE BofA data. US yields across asset classes were mixed to unchanged on Tuesday.
"IG index spreads were unchanged during yesterday’s session ahead of this afternoon’s FOMC meeting, with secondary market volumes remaining very heavy," BMO said. "According to TRACE statistics, secondary IG market activity ran 40% above 12m averages, with client activity skewed toward better selling."
Looking ahead, Bank of America Research said in a report late yesterday that it expects February IG issuance to be busier than usual and to reach US$170bn-$180bn, driven by a variety of factors. Among the probable drivers are a backup in rates and the DeepSeek event, which most likely pushed some deals into February, BofA said. In addition, the current M&A pipeline includes several larger deals while demand is strong.
HIGH GRADE
Issuance in the US investment-grade bond market is expected to take a pause today after a total of five deals from financial borrowers priced yesterday.
On Tuesday, US money-center bank JP Morgan sold US$3bn of perpetual preferred stock at 6.5%, setting a low reset spread of 215.2bp over Treasuries. That was below the reset spread of 246.1bp set by Goldman Sachs when it priced its US$1.9bn preferred issuance on January 16.
Toronto-Dominion and Capital One Financial raised funds yesterday, with the latter pricing a US$1.75bn 11-year non-call 10 subordinated note. Credit card company American Express and air lessor Aircastle were also in the market on Tuesday.
LEVERAGE/HIGH YIELD
The primary market for junk bonds is starting to hit its stride as borrowers continue to raise funding this week.
Student loan provider SLM Corp is readying pricing today on a US$500m five-year bond after setting initial price thoughts in the area of Treasuries plus 250bp or about 6.82%.
Proceeds will refinance the borrower's existing 4.2% 2025s.
Sinclair Television is also scheduled to price US$1.43bn bond today as part of a multi-faceted restructuring.
Left lead JP Morgan has released price talk in the 8.25% area on the new eight-year non-call three bond.
Yesterday, three offerings, from cruise ship company Carnival, the parent of theme park operator Merlin Entertainments and Vermillion Energy, raised a combined US$2.81bn.
STRUCTURED FINANCE
At least more four asset-backed offerings are on track to price this week, adding to the US$3.1bn of supply that has been sold since Monday.
Digital infrastructure assets move into the spotlight with a US$1.4bn inaugural issue from fiber network provider Zayo and a US$410m securitization from data center operator Sabey.
In other esoteric categories, fast food franchiser Church's Chicken is marketing a US$90m whole business securitization to fund a repayment to preferred equity investors.
The auto sector continues to roll out supply. American Credit Acceptance yesterday released guidance on its US$586.1m subprime auto deal. The US$286.5m Triple A rated money-market tranche is assessed at US Treasuries plus 46bp-48bp.
As for the CMBS market, there are at least four deals poised to price by the end of the week, led by a US$1.2bn bond from Simon Property and Institutional Mall Investors to refinance a high-end mall in Texas. Another large SASB offering in the market is a US$950m issue from Blackstone that is backed by a group of industrial properties.
LATAM
No LatAm issuers are expected to price bond deals today.
Yesterday, Latin American O&G producer GeoPark raised US$550m from an 8.75% five-year non-call two senior unsecured bond. The notes priced at par. Deutsche Bank, BTG Pactual and JP Morgan were the bookrunners.
Ambipar, a Brazilian environmental management company, raised US$400m yesterday from an offering of 10.875% eight-year non-call four senior unsecured bonds, priced at par. Bank of America, Bradesco and UBS were the bookrunners.
Finally, ATP Towers raised US$500m with a 7.875% five-year non-call two note, which also priced at par. Goldman Sachs and JP Morgan were global coordinators. Deutsche Bank and Scotiabank were joint bookrunners.
EQUITIES
Equity issuers proved reluctant to get out in front of today’s FOMC meeting outcome and high-stakes Magnificent 7 earnings releases (Meta Platforms, Microsoft, Tesla all report post-close), though the three life sciences IPOs still to price this week are getting good traction with investors.
Follow-on and CB issuance remained light late Tuesday though investors are swarming the US$170m Nasdaq IPO of Beta Bionics ahead of pricing late Wednesday.
The insulin pump maker upsized the offering by about a third earlier this week in response to overflowing demand and is expected to secure a robust pricing outcome.
Biotechs Maze Therapeutics (raising US$132.6m) and Metsera (US$292.2m) are also trending towards bullish outcomes for their Nasdaq IPOs on Thursday given that both offerings are already well oversubscribed and expected to close their order books early.
Infinity Natural Gas’s NYSE IPO of up to US$278m is also multiple-times covered ahead of pricing on Thursday night.
Still, these companies are poised to come to market on the heels of disappointing outcomes from last week’s US$1.75bn NYSE IPO of LNG exporter Venture Global (which priced about 40% below the original range and now trades another 20% below the offering price) and yesterday’s muted debut of pork processor Smithfield Foods (which ended its first session modestly lower at US$19.75 versus the US$20.00 IPO price).
Elsewhere, MSC Income Fund, a business development company/mid-market lender externally managed by NYSE-listed Main Street Capital, priced an upsized US$85.4m NYSE IPO late Tuesday, which was two days earlier than planned.
A syndicate led by RBC Capital Markets, Truist Securities, Raymond James, UBS and KBW found takers for 5.5m shares, or 13% more than the 4.85m-share deal outlined at launch last week, at US$15.53 (broadly in line with the BDC's estimated net asset value).
MSC Income shares will begin trading on the NYSE later on Wednesday under the symbol “MSIF”.
Also late Tuesday, dueling liver disease-focused biotechs Akero Therapeutics (which raised US$350m) and 89bio (US$250m) priced follow-on stock sales on the back of recent sharp gains in their stock prices.