Four offerings, including three from banks, are leading the IG primary on Tuesday.
This week supply is expected to taper off by Wednesday as the Easter and Passover holidays approach. Monday saw three deals totaling US$5.350bn, pushing monthly issuance to US$52.750bn.
HIGH GRADE
Three FIGs top the investment-grade primary Tuesday morning following mostly positive earnings.
JP Morgan announced a benchmark US-dollar re-opening of its 3.964% 2048 maturity, while PNC Financial Services Group is marketing a 10-year senior unsecured note with initial price talks at 95bp to 100bp over Treasuries.
Citigroup is in the market with 6-year NC5 fixed-to-float SEC-Reg senior self-led offering.
Analysts were speculating that PNC might look to make a splashy acquisition after SunTrust announced a US$28bn acquisition of BB&T earlier this year.
However, during the bank’s earnings call the company squashed those ideas noting that it has already made significant investments in the technology it needs to stay competitive.
Walmart is also in the market with a three-part senior unsecured note that’s expected to fetch tight spreads.
AT&T Monday evening announced the sale of its 9.5% minority stake in Hulu back to the streaming service for US$1.43bn. The proceeds from the sale - as well as other non-core asset sales - will be used to pay down AT&T’s US$175bn debt stack, the company said in a press release.
Additionally, Houston-based Waste Management announced a US$3bn acquisition of its smaller rival Advanced Disposal Services in order to expand operations into the eastern United States.
The company plans to fund the purchase with senior notes and bank debt.
HIGH YIELD
Primary market activity has been light in US high-yield so far this week, but Wednesday is expected to be busy with four deals expected to price that day.
Gogo Inc, Natural Resource Partners, Vizient and Melco Resorts are all readying pricing for tomorrow.
Natural Resource Partners’ US$275m senior note, rated Caa2/B/CCC+, has price whispers of 9% area. Citi is sole bookrunner.
Inflight internet firm Gogo Inc.’s US$900m 5NC2 offering has price whispers of high 9%-10% area. Morgan Stanley is the left lead.
Vizient, meanwhile, has announced a US$300m 8-year non-call three, while Melco is approaching investors with a US$500m 7-year non-call three.
JP Morgan analysts said the secondary market was “extremely quiet” on Monday, echoing the slow pace of primary activity.
Average high-yield spreads did not budge from Friday’s levels, remaining at 368bp over Treasuries, according to ICE BAML data.
This is the tightest the market has been so far this year. On the back of this rally, some high- yield buyers have told IFR that they are finding better risk-reward profiles in the investment-grade bond market. nL5N21X5H3
Regular junk bond issuer Netflix is due to release first quarter earnings after the close on Tuesday. The company’s most recent bond, a Ba3/BB- 6.375% note due 2029, is trading at its highest ever level of 109.5, according to MarketAxess.
STRUCTURED FINANCE
A handful of new ABS deals released guidance levels on Monday, although no deals from US issuers were priced.
Avis Budget Rental’s latest rental car ABS has been upsized from US$400m to US$650m and is due to be priced on Tuesday morning.
Joint bookrunners Citi, Credit Agricole and Deutsche Bank have tightened pricing by 10bp or more on each of the three tranches on offer. The senior US$535m A tranche has been launched at IS+95bp, inside of guidance of 105bp-110bp.
Exeter Finance has set guidance on its short dated 0.6 year tranche at EDSF+35bp area, 2bp wide of the equivalent tranche in Consumer Portfolio Services’ last subprime deal, which was priced on April 10.
Guidance is also out on two RMBS deals. Deephaven Residential Mortgage Trust’s non-QM RMBS deal, DRMT 2019-2, has guidance of IS+95bp on a two-year tranche.
Onslow Bay Financial’s non-QM deal OBX 2019-EXP1 has guidance of IS+125bp for a three-year tranche.
Moody’s is hosting its US Housing and Housing Finance Conference in New York on Tuesday.
Speakers from the government sponsored entities, securitization industry bodies and mortgage lenders will discuss the outlook for the housing market, RMBS issuance and GSE reform.
LATAM
America Movil’s US$2.25bn two-part issue on Monday could be the last deal in what is expected to be a shortened week ahead of the Easter holidays.
The Mexico-based telco returned to market yesterday after an over five-year hiatus from the US dollar market, renewing its presence there with new 10 and 30-year maturities.
Books peaked at around US$7.5bn earlier in the day, but fell to US$6.7bn - US$3.1bn on the 10 year and US$3.6bn - as investors fell by the wayside due to tighter pricing.
Both bonds were some of the most traded securities in early morning trading, with the 4.375% 2049 outperforming to be quoted at a at T+139bp after pricing at T+145bp, according to MarketAxess data.
The 3.625% 2029, meanwhile, was also tighter by as much as 4bp after hitting a tight of T+111bp.
Elsewhere, Trinidad Petroleum Holdings, previously known as Petrotin, launched an exchange for its 9.75% 2019 and 6% 2022 bonds. The gas and oil company is offering bondholders new 9.75% senior secured 2026 and cash in some cases for the 2019s.
EQUITIES
Zoom Video Communications, the collaboration software, hiked the valuation on its IPO this morning in response to heavy investor oversubscription.
The company revised talk on the offering to US$33-$35, from US$28-$32, while keeping the size at 20.9m shares, following a familiar pattern for high-growth software IPOs.
The high-end of the revised range values Zoom Video at US$10.25bn, or a high-teens multiple of EV-to-sales for 2020, based on the estimates of the underwriting banks.
Zoom Video more than doubled revenue last year to US$330.5m with the underwriting banks forecasting top-line to grow at 50% clip going forward.
Morgan Stanley, JP Morgan, Goldman Sachs and Credit Suisse, the joint bookrunners on the offering, are closing the books today at 4:00pm, ahead of pricing post-close Wednesday for a Thursday debut.
Turning Point Therapeutics, a developer of cancer drugs, hiked the size of its IPO this morning and accelerated pricing by one day.
Goldman Sachs, SVB Leerink and Wells Fargo now expect to price 8.8m shares, an increase from the 7.5m shares, within a US$16-$18 range this evening, a day earlier than planned.
There are seven IPOs expected scheduled to price this week that are seeking a combined US$2.9bn, including an up to US$1.275bn deal Wednesday for imaging-sharing site Pinterest.
Americold Realty Trust, a cold-storage REIT, is marketing a circa US$1.2bn primary raise today to help fund an acquisition announced in conjunction with the deal launch.
Bank of America Merrill Lynch and Goldman Sachs are joint bookrunners on the proposed sale of 40m shares, including 7m being sold via a forward agreement.
JBG Smith Property, an office-property REIT with close ties to Amazon.com, secured US$420m overnight Monday on the sale of 10m shares at US$42.00 apiece, toward the midpoint of a US$41.60-$42.60 marketing range.
Morgan Stanley, Bank of America Merrill Lynch and Goldman Sachs upsized the all-primary offering from 9m shares.
JBG is using proceeds to fund new building projects. The REIT signed an agreement last month with Amazon to lease three facilities as part of the online retailer’s HQ2. The companies started working together in November.