Six investment-grade bond offerings are expected to hit the primary on Monday.
Meanwhile, the Aramco Saudi offering is gearing up to make a large splash this week, with order books topping over US$40bn for a six-part benchmark deal that could be sized around US$10bn to US$15bn.
The offering is now expected to price on Tuesday, and that could drive IG supply for the week up to US$30bn to US$35bn.
We ended an otherwise busy week with one wee deal on Friday totaling US$400m, which brought weekly issuance to US$23.550bn and year-to-date supply to US$351.293bn, still behind the pace for the same period in 2018.
HIGH GRADE
Alabama-based insurance company Protective Life Global Funding is the only US-based borrower in the market on Monday, joining five overnight Yankee trades.
Those issuers include Hong Kong conglomerate CK Hutchison Holdings, Singapore-based United Overseas Bank, aircraft leasing company SMBC Aviation Capital Finance, Australian financial and insurance organization Suncorp-Metway and Korean chemicals company LG Chem, with a rare US-dollar Green bond offering.
US-based issuers are largely standing on the sidelines as markets wait for the highly anticipated US$10bn-US$15bn Saudi Aramco benchmark deal.
The mandated trade is coming with three-year fixed and/or floating rate notes as well as five, 10, 20 and 30-year fixed tranches at initial price thoughts of 75bp, 95bp, 125bp, 160bp, and 175bp over US Treasuries, respectively.
JP Morgan and Morgan Stanley are the joint global coordinators.
Meanwhile, secondary performance is mixed in early Monday trading, even as average high-grade spreads tightened to 23bp over Treasuries on Friday - 36bp in on the year, according to ICE BAML data.
HIGH YIELD
Banks have rejiggered the debt that will help finance a dividend to the private equity owners of office supplies company Staples, one of the banks leading the deal said on Monday.
The debt will help finance a roughly US$1bn dividend to private equity firm Sycamore Partners, which bought the Staples business in 2017.
The bond portion of the financing - split between secured and unsecured bonds - has been increased to US$3.025bn from US$2.125bn. The term loan has been downsized to US$2.3bn from US$3.2bn, according to the bond document.
Several terms on the bond were also changed.
The seven-year non-call three secured bond, rated B1/B+, has been increased almost threefold to US$2.025bn from US$750m, while the eight-year non-call three unsecured bond, rated B3/B-, has been cut to US$1bn from US$1.375bn.
Price talk on the secured bond is 7.25%-7.5%, which is tighter than whispers of 7.50-7.75%. Price talk on the unsecured bond is 10.75% area, which is wider than whispers of 10%-10.25%.
The bonds are expected to price Tuesday. Goldman Sachs is left lead. nL1N21M18L
UBS is leading the Term Loan B.
Just a couple of other deals are in the pipeline for pricing this week, including a Triple C rated deal for gaming company Golden Entertainment, and a new trade for Australia-based miner Mineral Resources that was announced this morning.
STRUCTURED FINANCE
A busy week is expected in the structured finance primary market this week with over US$9bn of new paper slated to be priced.
Over US$5bn was sold last week including a US$501m equipment deal from DLL Finance that was closed on Friday. The senior one-year notes were priced at EDSF+26bp.
The bulk of the expected deals are in the ABS sector with 15 deals being marketed. Bank of America Merrill Lynch analysts noted on Friday that this week could see the heaviest weekly volume from the ABS sector this year.
Six issuers from the auto sector are marketing deals as well as four equipment finance deals.
Volumes from those two corners of the market have increased 7.3% and 28.5% on a year-on-year basis, according to BAML.
GM Financial announced a US$1.23bn prime auto ABS deal which is expected to be priced on Monday or Tuesday.
CarMax has also launched its US$1.15bn prime auto loan deal, which has the potential to be upsized to US$1.365bn.
Dell meanwhile has launched a US$914m equipment finance transaction, which is expected to be priced early this week.
Four CMBS and three RMBS deals are also in the pipeline.
LATAM
The Latin American primary market looks set for a busy week as a string of issuers prepare to come out of the shadows and print bonds in coming days.
The Republic of Panama, Brazilian steel credit CSN as well as two Peruvian issuers - Consorcio Transmantaro and Alicorp - are roadshowing this week.
Panama’s Global Bank is also marketing a medium-term US dollar bond.
This comes as Saudi Aramco casts a long shadow over EM with its jumbo dollar deal which is expected to price on Tuesday.
Interestingly two deals - Panama and Alicorp - are both designed to encourage foreigners to invest in local or domestic currency markets.
Panama, which has a dollarized economy, is selling local Treasury notes under a Euroclearable format, while Alicorp is readying a 144A/RegS local currency deal.
Brazil’s CSN, meanwhile, is trying its hand at a dollar deal to attend to upcoming maturities.
Rating agencies view the move positively. Fitch moved its B- rating on CSN from watch negative last week, citing a reduction in short-term refinancing risks. S&P also placed its CCC+ rating on watch positive for similar reasons.
The steel company hopes to use proceeds from the benchmark size bond with an intermediate maturity to fund a cash tender for its 2019s and 2020s.
EQUITIES
The parade of unicorns continues with the launches this morning of IPOs for Pinterest and Zoom Video Communications set to provide tests of private-to-public valuations.
Pinterest is targeting a US$11.3bn valuation on its offering, below the US$12.3bn the digital scrapbooking platform fetched on US$130m private raise in June 2017.
Pinterest is seeking to raise as much as US$1.275bn on its IPO, so the public offering is a much stiffer test of its business and future growth.
Goldman Sachs, JP Morgan and Allen & Co are joint bookrunners on the proposed sale of 75m shares at US$15-$17 apiece. They expect to price Pinterest’s IPO on April 17.
Zoom Video Communications, the video conferencing platform operator is seeking to raise US$925m that same evening in an offering structured as both primary and secondary.
Morgan Stanley, JP Morgan, Goldman Sachs and Credit Suisse are marketing 28.9m shares, including 10m by existing shareholders, at US$28-$32, a wider than normal US$4 spread that provides them flexibility on valuation.
Salesforce.com plans to invest US$100m in a concurrent private placement at the IPO price.
At the high end of the marketed range, Zoom Video would be valued at US$9.5bn, versus just US$1bn it was valued at on a US$115m private round in January 2017.
Palomar Holdings, a specialty insurer, also launched a circa US$95m all-primary offering this morning.
Barclays, JP Morgan and Keefe, Bruyette & Woods are marketing 5.6m shares at US$14-$16 each for pricing on April 15.
Biotechs Hookipa Pharma (US$95.6m)and Turning Point Therapeutics (US$135.6m) round out this morning’s IPO launches. Both are expected to price on April 17.