No deals are expected in the high-grade and high-yield corporate bond markets this Thursday as desks slowly retreat into holiday mode.
US financial markets are closed Friday.
Structured finance will see some action today.
But the focus will be on the equities markets as Pinterest and Zoom lead IPOs into trading.
So Wednesday was the last day of IG issuance for the week, with three deals totaling US$6.500bn, according to IFR data.
That moved weekly IG issuance up to US$21.6bn, surpassing the forecasted US$10bn-US$15bn of supply. Issuance for April now stands at US$69.000bn.
HIGH GRADE
There are goose eggs in the investment grade primary Thursday as no issuers announced new deals.
In this holiday shortened week, issuers took advantage of positive earnings and tightening average investment grade spreads, which have narrowed 8bp in the last 10 days of trading to 116bp over Treasuries, according to ICE BAML data.
Bank of America was the largest issuer in the market Wednesday with a US$4.5bn bond across two tranches that priced with nearly identical spreads despite having very different maturities.
The eight-year no call seven-year bond priced at 107bp over Treasuries while the longer 21-year no call 20-year bond came with spreads of 110bp plus Treasuries.
“You expect a little more steepness to the curve. Given how flat the treasury curve is the credit curve should be more positively sloped,” Scott Kimball, portfolio manager at BMO Asset Management, told IFR.
“But if you look at where spreads are for financial issuers they have demonstrated that they can make money in a flat yield curve environment.”
HIGH YIELD
Five borrowers raised US$2.605bn in the high yield market on Wednesday, leaving just one borrower left in the pipeline.
Three of the five issuers were able to upsize their deals. GFL Environmental’s US$500m offering was increased to US$600m, Gogo Inc added an additional US$5m to its US$900m deal and Natural Resource Partners increased its deal from US$275m to US$300m.
GFL Environmental was priced at the tight end of talk at 8.25%, while Natural Resource Partners brought pricing inside talk at 9.125%.
Gogo Inc was priced at the wide end of guidance at 10%.
Casino operator Melco meanwhile raised US$500m at the tight end of talk at 5.25% and healthcare firm Vizient also priced inside of talk at 6.25% on its US$300m deal.
The flurry of pricing on Wednesday leaves just a US$750m seven-year senior secured offering from car seat manufacturer Adient in the pipeline. Lead manager Bank of America Merrill Lynch starts a roadshow next week.
Investors have said that a light primary market and strong fund inflows are creating “fantastic” technical conditions for the market.
JP Morgan analysts expect fund flow data to show around US$925m of inflows to high yield funds this week, which would be the 13th inflow in the last 15 week.
STRUCTURED FINANCE
Two ABS deals from Textainer Marine Containers and Bank of Montreal were priced on Wednesday, leaving three left in the pipeline.
One of those, a US$549m consumer loan deal from SoFi, could price on Thursday. The senior notes have guidance of EDSF+50bp-55bp area, inside the 60bp level its previous deal was priced at in February this year. Citi is structuring the deal.
A US$521.4m credit card deal from American Express is expected to be launched next week. RBC is structuring the deal.
The CMBS market was also active on Wednesday, with Wells Fargo and Bank of America Merrill Lynch closing a US$325m single-asset deal to finance an AllianceBernstein fund’s acquisition of the Hyatt Regency hotel in New Orleans. The deal was priced at 105bp over Libor.
Two deals are outstanding in the RMBS market - JP Morgan has filed a 15G for a new offering from its prime jumbo shelf, while Credit Suisse is pre-marketing a US$368m non-performing loan deal from Pretium Mortgage Credit Partners, which is expected to be priced next week.
LATAM
Telecom America Movil remains the sole primary issuer to price a deal this week, with its bonds continuing to trade well in the secondary markets.
Its new 10-year bond was changing hands at around 110bp over US Treasuries this morning, 5bp inside where it priced, while the 30-year has rallied 9bp to trade at 136bp, according to MarketAxess data.
America Movil’s CFO, Carlos Garcia Moreno, told IFR that the company, which has been in deleveraging mode in the past few years, is eyeing more issuances, potentially in local currency and euros.
Following the markets quiet period, there are a handful of borrowers expected to announce roadshows after the Easter break.
“I expect a handful of announcements next week,” said one syndicate banker pointing to a potential flurry of activity in the coming weeks.
Elsewhere, Petrobras’s CEO Roberto Castello Branco announced on Tuesday a 10-cent price hike for diesel prices, emphasizing the oil firm’s independence from government interference.
Markets had grown uneasy about Brazilian President Jair Bolsonaro’s recent request for “fair” prices on diesel.
The company’s 8.75% 2026 was trading at a dollar price of 118.95 this morning, down from 119.12 at Tuesday’s close.
EQUITIES
A big week in the US equity market concluded last night as companies raised US$4.6bn across nine deals, including five IPOs that took down US$2.6bn of new funding.
Pinterest’s offering came two-dollars above the marketing range to gross the online image board operator US$1.425bn.
Goldman Sachs, JP Morgan and Allen & Co placed 75m shares at US$19 apiece, versus the US$15-$17 marketing range, after prolonged negotiations last night at GS’ offices.
Pinterest generated momentum on its potential to monetize a growing user base through targeted advertising.
The IPO valued the company at US$12.5bn on a fully diluted basis, above the US$12.3bn struck on its last private funding round, according to IFR calculations and Refinitiv data.
“PINS”, Pinterest’s stock ticker, will debut today on the NYSE.
Zoom Video Communications, a videoconferencing software unicorn, priced 20.9m shares at US$36.00, above the US$33–$35 range that was revised from US$28–$32 at launch.
Zoom Video is expected to open trading on Nasdaq at around 10:20am under the symbol “ZM”.
Vaping products distributor Greenlane Holdings (US$102m), royalty trust Brigham Minerals(US$261m)and biotech Hookipa Pharmaceuticals (US$84m) also priced their IPOs last night.
Aqua America sealed US$1.725bn of funding for its proposed US$4.275bn acquisition of People’s Natural Gas from the two-part sale of common stock and mandatory convertible.
The water utility opted to upsize the equity component from US$1bn to US$1.125bn and downsize the MCB from US$725m to US$600m. The MCB priced at 6% dividend and 22.5% conversion premium to the US$34.63 reference on the common, the aggressive ends of price talk.