IFR SNAPSHOT-Eight IG deals set to flood primary market

8 min read
John J. Doran

Following a busy Tuesday, now eight deals are expected to price in the IG primary on Wednesday as issuers continue to take advantage of a favorable market climate.

On Tuesday, six deals totaling US$6.250bn were priced, bringing weekly issuance to US$7.700bn.

HIGH GRADE

Three blue-chip names will be joining the deal fray in the IG primary today: General Motors, Lowe’s and Tencent.

The Chinese internet technology company is coming to the US for its first US-dollar deal since it tapped bond markets for US$3.5bn across two tranches in January 2018. It is marketing a four-part bond.

Lowe’s is offering 10 and 30-year notes, while General Motors is marketing three-year fixed and/or floating-rate notes.

Floaters have become increasingly hard to price in an environment where the consensus is that Federal Reserve rate cuts are more likely than rate hikes, one syndicate banker told IFR.

“The lack of floating rate paper has been interesting because it’s driven by the investor base,” the banker said. “But, you can still get deals done.”

UK-based information services firm IHS Markit, French construction company Vinci, insurance company New York Life Global Funding, Rockies Express Pipeline, and Allied Irish Banks are also in the market.

Separately, AT&T on Tuesday said it is leasing back a prominent portion of its newly acquired West-side Manhattan skyscraper - the second tallest office space in the city - for US$2bn in order to cut debt after it’s US$85bn take over of TimeWarner.

HIGH YIELD

No deals are expected to price in the US high-yield market on Wednesday, but there appears to be strong demand for offerings.

The commitment deadline for office supply company Staples’ leveraged loan has been accelerated to Friday after getting a welcome reception from the buyside, one of the banks involved in the transaction said on Wednesday.

The dividend recapitalization, which also includes a high-yield bond, will finance a US$1bn dividend payment to Staples’ sponsors, led by private equity firm Sycamore Partners.

The deadline on the US$3.2bn Term Loan B was originally set for Tuesday April 9. There was no update on price talk which was circulating last week at 475bp-500bp over Libor. There is a 0% floor and a discount of 99. nL1N21G1CC

Staples kicked off the roadshow for a two-part US$2.125bn high-yield bond offering on Tuesday, which is expected to price later this week.

Whispers are heard at 7.50-7.75% on a US$750m secured seven-year non-call three bond and 10%-10.25% on a US$1.375bn eight-year non-call three tranche. nL1N21K0HM

UBS is leading the loan while Goldman Sachs is leading the bonds.

A couple more deals have also joined the pipeline from NGL Energy Partners and real estate and oil & gas company Forestar Group.

STRUCTURED FINANCE

Four ABS issuers priced deals on Tuesday while the pipeline in other corners of the securitization market has started to build, with three RMBS deals surfacing as well as a handful of new single asset, conduit and agency CMBS deals.

First Investors was able to price its subprime auto loan 5bp inside guidance on Tuesday at 40bp over swaps. The US$193.6m deal was arranged by Wells Fargo and Credit Suisse.

Ford was able to upsize its floorplan ABS deal from US$1bn to US$1.46bn. The deal, led by Barclays, Credit Agricole and Lloyds, was priced at IS+51bp on the senior three year notes and 75bp on the senior five year notes.

Trinity Industries also priced its railcar leasing deal in line with guidance at IS+150bp on the six year tranche.

In the CMBS market, Exantas Capital Corp. is lining up a new static CLO backed by transitional commercial real estate loans.

CRE CLO issuance has picked up in recent weeks after a slow start to the year.

Last year, over US$14bn of CRE CLO paper was sold, almost double the US$7.8bn sold in 2017.

LATAM

Telefonica del Peru (TdP) has pulled the trigger on a local currency bond as markets pick up steam over signs of renewed growth in China, which also looks to be close to cutting a trade deal with the US.

“The mood has got a boost (from China) and equity and rates are up,” said a banker.

The Fed and the ECB’s dovish stance is also seen as positive for EM and for local currency trades as well, say bankers.

TdP has announced an eight-year local currency bond with a seven-year average life ahead of expected pricing on Wednesday.

The bond is being sold under a 144A/RegS format and amortizes annually starting on April 2025. The bond is denominated in local currency but payable in US dollars.

BBVA, Bank of America Merrill Lynch and JP Morgan are acting as joint bookrunners on the deal, which will be governed by New York law and listed in Singapore. Issuer ratings are Ba1/BBB.

EQUITIES

The IPO market is alive and well, despite the daily ruminations over Lyft.

The ride-sharing company fell for a second consecutive day, closing the session down four cents to US$68.97 (versus the US$72.00 IPO price).

Silk Road Medical, a fast-growing company seeking to advance commercialization of a device to prevent strokes, has increased both the size and valuation targeted on its IPO.

The company is now looking to 6m shares at US$19-$20, above the US$15-$17 targeted at launch on a deal originally sized at 4.7m shares, it revealed in amended filing this morning.

JP Morgan and Bank of America Merrill Lynch, the lead banks on Silk Road’s IPO, closed bookbuilding yesterday at 4:00pm, ahead of pricing this evening and after communicating to investors that the deal was well oversubscribed.

Tradeweb, the Refinitiv-backed fixed-income trading platform, is on a similar trajectory, after leads on its IPO yesterday increased the offering size to accommodate strong investor demand.

JP Morgan, Citigroup, Goldman Sachs and Morgan Stanley, all of which are members Tradeweb’s bank-owners, hiked the size of Tradeweb’s IPO to 36.25m secondary shares, from 27.3m shares, while maintaining the US$24-$26 marketing range.

Tradeweb’s bookrunners closed bookbuilding yesterday at 4:00pm, ahead of pricing this evening and Nasdaq debut Thursday.

NGM Biopharmaceuticals, a biotech focused on non-alcoholic steatohepatitis (NASH), is also slated to price its IPO this evening. The offering of 6.67m shares being marketed at US$14-$16 is supported by a US$30m indication from an existing investor and a subsidiary of Merck committing to invest via a concurrent private placement.

Goldman Sachs, Citigroup and Cowen are joint bookrunners on NGM’s IPO.

Chinese social media company Ruhnn Holding is scheduled to debut on Nasdaq today, following midpoint US$12.50 pricing on its 10m ADS IPO last night. The offering is slotted to open at 10:45am.

iHeartMedia, the former Clear Channel Communications that was taken private in 2008 for US$17.8bn, filed documents this morning for an IPO.

Goldman Sachs and Morgan Stanley are mandated as joint bookrunners on the offering, which will comprise a mix of primary and secondary shares.