The US investment-grade primary did not waste any time getting back into issuance mode this morning after yesterday's Fed meeting, with at least eight offerings slated for sale on Thursday.
The high-yield market is also active, with at least one issue in the market for pricing today.
The ECM arena has been busy with IPOs, with Beta Bionics upsizing its Nasdaq offering twice and pricing at the top of the marketing range for proceeds of US$204m on Wednesday. Bankers also expect solid outcomes from the three IPOs pricing late Thursday.
There is quite a bit of economic data out today to keep everyone busy, with GDP, jobless claims and housing on the menu. But the blackout period surrounding the FOMC meeting is still in place so there are no Fed speakers scheduled.
Markets sold off yesterday after the Federal Reserve's announcement, with a hawkish twist and some changes to its statement language, saying that it would pause its fed fund rate cuts as it assesses ongoing economic developments.
"As widely expected the FOMC kept the fed funds rate unchanged in the 4.25-4.50% range after delivering 100bps of cuts over the previous three meetings," Deutsche Bank Research said in a report today. "The on hold decision was accompanied by some potentially hawkish tweaks in the press release, notably removing wording that 'inflation has made progress toward the 2% objective.'"
Following the meeting, Deutsche Bank Research said its US economists continue to think that the fed funds rate is likely to remain above 4% this year, with a base case of no additional cuts, Deutsche said.
This morning, in the wake of the first three Magnificent 7 tech companies that reported after the bell yesterday evening, US stocks are turning around and opened the session sharply higher.
"It was a bit of a mixed bag but US futures are higher this morning," Deutsche Bank said. US Treasuries were rallying this morning, with the 10-year benchmark note yield hovering around 4.51%.
With the Fed's two-day FOMC meeting concluding yesterday, no offerings were priced in the IG primary, leaving weekly IG issuance so far to date at US$11.67bn, according to IFR data. But that will change with today's slate of offerings.
There is, however, some uncertainty about whether it will be enough to push IG supply past this week's expectations.
The syndicate forecasts for IG supply coming into the week were for around US$24bn, BMO said. Looking at current levels, BMO said this week could become the first of the year to fall short of expectations if another US$12.4bn of supply does not appear.
However, two HY issues did manage to land in the primary yesterday totaling US$1.93bn, lifting weekly HY volume to US$5.055bn and January volume to US$13.385bn.
The average IG bond spread was unchanged at 81bp on Wednesday for the third consecutive market session and the HY bond spread widened by 2bp to 268bp, according to ICE BofA data. US yields across asset classes were higher on Wednesday.
"IG index spreads were unchanged in response to the January FOMC meeting," BMO said.
HIGH GRADE
At least eight US high-grade bond deals are expected to price on Thursday.
Cloud computing services company Oracle is issuing a six-tranche bond to refinance its 2025 and 2026 debt maturities. Utility NextEra Energy Capital is also marketing a six-part senior unsecured bond.
Medical technology company Stryker is issuing a four-part bond, split into two, three, five and 10-year tranches. The offering is earmarked for financing a tender offer in connection with its US$4.9bn acquisition of Inari Medical.
Utility Nevada Power is looking to price a US$300m 30.25-year non-call five junior subordinated note in a fixed-to-fixed reset format. Private-credit lender Bain Capital Specialty Finance is marketing a US$300m five-year senior unsecured note.
Canadian lender Bank of Nova Scotia is issuing a four-part senior unsecured bond focused on short-dated tenors. Custody bank State Street is selling a US$750m perpetual non-call five preferred security at IPTs in the 6.875% area.
REIT Alexandria Real Estate Equities is pricing a 10-year senior bond.
LEVERAGE/HIGH YIELD
Borrowers continue to churn out deals in the US primary market for junk bonds in what has been a busy week for the asset class.
Adient Global, a manufacturer of automobile seating equipment, is out with a US$795m eight-year non-call three offering ahead of pricing today. Proceeds will refinance 2026 notes.
Meanwhile, building products manufacturer Quikrete is readying pricing for Friday on what will be the biggest M&A trade in leveraged finance so far this year.
Leads have respectively set guidance in the areas of 6.375% and 6.875% on a US$3.95bn seven-year non-call three secured bond and a US$2.25bn eight-year non-call three unsecured tranche.
The financing package, which will fund the US$11.5bn acquisition of Summit Materials, also includes a US$3bn term loan and a US$1.5bn asset-based revolving credit facility.
Medical Properties Trust, a REIT focused on healthcare facilities, is marketing a US$2bn seven-year non-call three deal and a €500m offering with the same tenor.
Proceeds from the secured deal, which is expected to price this week, will be used to redeem notes maturing in 2025 and 2026.
DirecTV is preparing a US$1.75bn six-year non-call two senior secured note for pricing on Monday. Proceeds from the bond and a term loan will be used to repay debt and for general corporate purposes.
And Long Ridge Energy is readying a US$500m offering of seven-year non-call three senior secured notes, with pricing expected next week.
STRUCTURED FINANCE
At least three asset-backed deals are moving toward pricing by the end of week, which would bring this week's issuance to over US$5bn.
Fiber network provider Zayo is seeking to clinch its debut securitization, which will raise US$1.4bn. Price guidance on the US$1bn Single A rated senior class is US Treasuries plus 165bp-175bp.
Data center operator Sabey is in the market with a US$410m five-year offering, while fast food franchiser Church's Chicken is readying a US$90m whole business securitization.
Dealmakers have started this morning to line up ABS trades for next week. Honda mandated MUFG, Barclays, Citigroup and Mizuho to arrange its US$1.6bn prime auto deal, while Ford hired a group of banks led by Bank of America to place its US$1bn prime auto revolver. Joining them is General Motors, which started marketing a US$1.4bn auto lease securitization overseen by a bank group with Societe Generale as the left lead.
As for the CMBS market, data center firm Switch yesterday filed with the Securities and Exchange Commission for a US$2.4bn green bond, which is slated to be the largest-ever such deal in this ESG format. The securitization backed by three data centers is expected to price in early February.
Yesterday, three private-label CMBS issues combined to raise more than US$2.5bn, including a US$1.2bn retail offering from Simon Property and Institutional Mall Investors.
Meanwhile, the RMBS sector rang up a busy session yesterday as six issuers sold more than US$2bn in supply.
LATAM
Peruvian precious metals miner Buenaventura is expected to price a seven-year non-call three senior unsecured note today via BTG Pactual and JP Morgan. Price thoughts have opened in the mid 7% area.
Colombian airline Avianca is also expected to price a US$1bn offering of five-year non-call two senior secured notes today via Credit Agricole, Goldman Sachs, Barclays and Morgan Stanley. Price thoughts are in the low 10% area.
EQUITIES
Beta Bionics added some much-needed spark to the US IPO market by upsizing its Nasdaq offering twice and pricing at the top of the marketing range for proceeds of US$204m.
A syndicate led by Bank of America, Piper Sandler, Leerink Partners and Stifel late Wednesday sold 12m shares in the insulin pump maker at US$17 versus the US$16-$17 range.
The syndicate already earlier this week upsized the offering to 10m shares from 7.5m at launch and upped the range from US$14-$16, but double-digit oversubscription levels gave the company and the banks the confidence to upsize the offering a second time.
At the final terms, Beta raised 70% more than initially expected.
The company collected another US$17m from a concurrent private placement to mutual fund Wellington Management, taking overall proceeds to US$221m.
Beta shares will begin trading on Nasdaq later on Thursday under the symbol “BBNX”.
The outcome marked a stark contrast to the past week’s disappointing IPOs of LNG exporter Venture Global and pork processor Smithfield Foods, which both priced their (much larger) offerings well below their initial marketing ranges and traded down in their first sessions.
Bankers also expect solid outcomes from the three IPOs pricing late Thursday, including biotechs Maze Therapeutics (raising US$132m) and Metsera (US$292m) as well as natural gas E&P Infinity Natural Resources (US$278m).