The US investment-grade primary, after a fulsome month, is ending January by taking a break on Friday, while the high-yield arena is game for another active session with one issue slated for pricing.
Quikrete closed the books yesterday on its two-part HY US$5.45bn offering and expects pricing later today.
January ends with total IG supply of US$194.9bn, making it the second busiest January on record following the US$196.17bn sold during the first month of last year, according to IFR data.
It was another busy week for the IG primary with FIG offerings as the featured asset class, including Capital One and JP Morgan bellying up to the borrowing bar.
The Federal Reserve's decision on Wednesday not to cut the fed funds rate and to offer a hawkish view did not dissuade issuers from jumping back into the market on Thursday. And despite the market turmoil generated in the tech arena earlier in the week from the DeepSeek impact on the AI sector, Oracle forged ahead with its bond offering yesterday and managed to place almost US$8bn of debt with eager investors.
Over in the ECM primary, it was an active week for IPOs, although it was not without its troubles. Smithfield Foods became the second large US IPO in a matter of days to deliver an underwhelming pricing outcome and subpar market debut. Beta Bionics, however, raised an upsized US$204m from its Nasdaq IPO, taking in nearly double the amount of money it sought to raise.
The week ends with a handful of economic data reports, starting with the Q4 Employment Cost Index and December Personal Income and Outlays report, both at 08:30am New York time.
The week wrapped up in the IG primary on Thursday with eight offerings totaling US$20.35bn, lifting weekly supply to US$31.95bn and January issuance to US$194.9bn, according to IFR data. The average new issue concession for the IG deals on Thursday was 2.75bp and the average order book was 3.44x subscribed, the data show. The average move from initial price thoughts to pricing was 24.79bp tighter.
BMO said in a report today that the week's issuance beat syndicate expectations coming into the week for US$24bn.
In the HY arena yesterday, two issues were priced totaling US$2.295bn, raising weekly supply to US$7.35bn and January issuance to US$15.68bn, IFR data show.
The average IG bond spread was unchanged at 81bp for the fourth consecutive market session on Thursday and the HY bond spread edged in by 1bp to 267bp, according to ICE BofA data. US yields across asset classes ebbed on Thursday.
"IG index spreads were unchanged during yesterday’s session as risk sentiment declined over the course of the day in response to President Trumps’s announcement that he will be moving forward with 25% tariffs on Canada and Mexico," BMO said. "Secondary market activity remained very strong yesterday with volumes running an estimated 50% above the average Thursday over the past year."
For the week ended January 29, Lipper US Fund Flows reported that the all short-intermediate investment-grade debt funds/ETFs net inflow was US$1.345bn and the all corporate high-yield debt funds/ETFs net inflow was US$194.84m. The all domestic equity funds/ETFs net inflow was US$5.569bn and the all nondomestic equity funds/ETFs net inflow was US$367.12m.
BMO said the most recent mutual fund flow data from Lipper for the week ending January 29 showed an inflow into IG funds.
"That brings the monthly total inflow to $5.24bn," BMO said. "That comes in on the lighter side of the historical experience with January the largest inflow month of the year, seeing an average inflow of $9.5bn over the past decade with a median observation of $8.5bn."
HIGH GRADE
The US investment-grade bond market is not expected to draw fresh issuance today, with investors looking ahead to the coming week and month.
A busy pipeline is building up for the start of February. Fuels producer Valero Energy is holding fixed-income investor calls on Friday for a potential senior unsecured transaction.
Elsewhere, Foundry JV Holdco – which holds Brookfield's 49% interest in a joint venture with Intel – is arranging calls for today for a multi-tranche senior bond.
Issuance in February is expected to come from corporate borrowers as they emerge from earnings blackouts. In particular, M&A-related issuance is expected to represent a significant source of high-grade bond supply.
Goldman Sachs analysts said in a late Thursday note that there were plenty of highly rated US corporate borrowers with the balance sheets to engage in debt-funded acquisitions without risking the ire of rating agencies.
"Our findings suggested that there is a non-trivial segment of issuers rated A and above that have enough debt capacity to add some leverage without subjecting themselves to a downgrade," the analysts said.
LEVERAGE/HIGH YIELD
Quikrete Holdings is topping off an active week for the asset class as the building products manufacturer looks to wrap up its US$9.4bn funding package backing the purchase of Summit Materials.
Yesterday, leads launched the US$3.95bn seven-year secured bond flat to price talk of 6.375%, but tightened the eight-year unsecured tranche to 6.75% from 6.875% after downsizing it to US$1.5bn.
The term loan, in turn, was upsized to US$3.95bn and priced at 225bp over SOFR, inside guidance of 250bp–275bp. Final pricing on the bond is expected later today.
With Quikrete, the primary market for US high-yield bonds will have seen nine issuers raise US$12.8bn this week.
And the pipeline remains active, with DirectTV and Long Ridge Energy preparing to come to market next week.
STRUCTURED FINANCE
The asset-backed primary will wrap up a solid start to 2025 with at least three offerings poised to price today.
Two digital infrastructure issues from Zayo and Sabey are expected to bring in a total of US$1.8bn, while Church's Chicken is slated to raise US$90m with a whole business securitization. The trio of deals would lift monthly issuance to more than US$30bn, which would trail the US$35.4bn total in January 2024, IFR data show.
Now that this month's business is nearly done, dealmakers are lining up supply for February. Seven ABS issuers have their sights set on raising US$7bn next week. The auto sector will lead the way, with large prime offerings from BMW and Honda.
As for the CMBS market, at least two issues are expected to be completed today. Stockbridge is in the market with a US$270m bond to refinance two office buildings in California, while FS Credit is seeking to price a US$890.2m CRE CLO offering backed by a portfolio of apartment properties.
A flood of commercial property bonds is scheduled to hit the market in the coming days, led by a US$2.4bn green deal from data center firm Switch, which is the biggest such offering in this ESG format.
LATAM
Peruvian precious metals miner Buenaventura raised US$650m yesterday from a seven-year non-call three senior unsecured note via BTG Pactual and JP Morgan. The bonds, which carry a 6.8% coupon, priced at a yield of 7.1%.
Also yesterday, Colombian airline Avianca printed US$1bn of 9.625% five-year non-call two senior secured notes, pricing them at a yield of 9.875%.
Deutsche Bank, Citigroup, JP Morgan, Credit Agricole, Goldman Sachs, Barclays and Morgan Stanley were the bookrunners.
EQUITIES
Metsera took the unusual but seemingly bullish step of pricing its Nasdaq IPO above range but lowering the number of shares sold to raise US$275m late Thursday.
In one of three IPO pricings late Thursday, a syndicate led by Bank of America, Goldman Sachs, Evercore, Guggenheim Securities and Cantor priced the sale of 15.3m shares in the obesity drug developer at US$18 versus the marketed terms of 17.2m shares at US$15-$17.
The robust pricing outcome reflected overflowing demand but modestly downsizing the offering into strength is almost unheard of in biotech ECM (where the appetite for cash is high) and suggests existing investors may have had a say in the final terms.
Metsera shares will begin trading on Nasdaq later on Friday under the symbol “MTSR”.
Also late Thursday, kidney disease specialist Maze Therapeutics upsized its Nasdaq IPO by 12% and priced the offering inside the range for US$140m of proceeds.
Backed by demand from sector-dedicated investors, JP Morgan, TD Cowen, Leerink Partners and Guggenheim Securities sold 8.75m Maze shares at US$16, the middle of the $15.00-$17.00 marketing range.
Maze shares will begin trading on Nasdaq on Friday under the symbol “MAZE”.
Appalachian Basin-focused E&P Infinity Natural Resources also priced a full-size NYSE IPO of 13.25m shares at US$20, the upper end of the US$18-$21 range, for proceeds of US$265m.
Citigroup, Raymond James, Bank of America, Capital One Securities and Truist Securities acted as joint bookrunners.
Infinity shares will begin trading on the NYSE later on Friday under the symbol “INR”.
Although IPOs accounted for roughly half of the US$3.7bn raised in US ECM this week, there was also an uptick in follow-ons and overnight stock sales, especially from the healthcare and energy sectors.
Biotechs Akero Therapeutics (US$350m) and 89Bio (US$250m) capitalized on investor interest in new liver disease treatments, while Immunome (US$150m) funded clinical trials for its portfolio of cancer drugs.
Viper Energy (US$1.1bn) and Atlas Energy Solutions (US$265m) priced overnight stock sales to fund recent acquisitions.