Three investment-grade offerings are set to price on Wednesday, with five of their high-yield cousins joining the primary market as well. Three of those high-yield offerings are from the Triple C tier.
On Tuesday, four IG deals came to market totaling US$9.750bn, pushing weekly volume to US$15.100bn and monthly supply to US$62.500bn, according to IFR data. Year-to-date issuance now stands at US$390.243bn, just behind the volume pace for the same period last year.
Meanwhile, the recent inversion of the US Treasury yield curve does not signal an impending recession, so say 86% of fund managers, according to the Bank of America Merrill Lynch April Fund Manager Survey.
BAML further noted in a separate report that the Treasury curve has steepened back to pre-March 20 FOMC meeting levels.
“With both a more dovish Fed and reassuring economic data, not surprisingly risk assets have rallied over the same period of time with equities up 2.6% and IG credit an even more impressive 10bps tighter.”
“Slightly higher interest rates, but contained rates risk and positive macro is a recipe for tighter spreads.”
HIGH GRADE
The three IG issuers are all from financial institutions fresh off strong earnings.
Bank of America is leading the way with a two-tranche senior unsecured note consisting of an eight-year no call seven tranche and a 21-year no call 20 bond.
Blackrock is offering a benchmark 10-year note to fund all or a portion of its acquisition of eFront Holdings and the repayment of outstanding bond debt coming due this year.
Lastly, National Building Society also announced a four-year no call three-year bond.
Separately, Bristol-Myers Squibb announced on Wednesday a debt exchange for up to US$19.85bn of Celgene bonds following shareholder approval for the acquisition last Friday. nL1N21Z0EJ
The combined entity is expected to tap bond markets in the US and Europe for some US$10bn-US$15bn in the third quarter in order to fund the purchase.
In the secondary, Qualcomm and Apple bonds are moving tighter after the two companies agreed to settle a bitter two-year legal battle over an IP licensing dispute. nL5N21Z4NQ
Qualcomm bonds are tighter by as much as 32bp, according to MarketAxess data.
HIGH YIELD
With spreads in the US high-yield market creeping back towards the tights seen last October, a handful of low-rated borrowers are among those looking to raise debt.
Five issuers are expected to price deals on Wednesday and three of them have at least one Triple-C rating - inflight internet firm Gogo Inc, Natural Resource Partners, and environmental services firm GFL Environmental.
Hong-Kong based casino operator Melco Resorts and Vizient, a healthcare analytics firm, are also expected to price deals.
The five issuers are looking to raise a combined US$3.225bn.
Average high-yield spreads tightened 4bp on Tuesday to 364bp over Treasuries, according to ICE BAML data. The market was last at this level in early November last year.
Meanwhile, Netflix announced first quarter earnings on Tuesday. The streaming company reported negative cashflow of US$460m, versus negative cashflow of US$287m in the first quarter last year.
Netflix said it expects to run a cash deficit of US$3.5bn this year and the firm said it intends to continue financing its cash needs in the high-yield market.
Its bonds have not moved significantly in the secondary market since the earnings release, according to MarketAxess data.
STRUCTURED FINANCE
ABS issuers are continuing to find the market receptive with three deals well-received on Tuesday.
Avis Rental’s ABS deal was upsized to US$650m from US$400m and priced 10bp inside the tight end of price guidance at IS+95bp.
The shortest dated tranche of appliance chain store Conn’s US$382m consumer loan deal was also priced 5bp inside the tight end of guidance, at EDSF+80bp.
And Exeter Finance was able to price the largest tranche of its US$700m subprime auto deal, a US$306m 0.6 year note, 2bp inside guidance at EDSF+33bp.
At least three more ABS deals are expected to be priced this week with Textainer Marine Containers due to price its US$250m container lease deal on Wednesday.
The RMBS market was also active with three issuers pricing deals.
So far the CMBS market has yet to price a deal this week although some new paper was added to the pipeline.
AB FBB Loyola Propco LLC, an affiliate of AllianceBernstein U.S. Real Estate Partners II L.P, has filed for a US$325m single-asset CMBS to finance the US$399m acquisition of the Hyatt Regency hotel in New Orleans.
Wells Fargo and Bank of America Lynch are the
LATAM
It is another quiet day in the LatAm primary market with no major deals expected through the end of the week.
But issuance is expected to pick up after the holiday weekend as corporates prepare to take advantage of what remains a good window of opportunity before blackout periods in mid-May.
“Conditions are very ripe at the moment,” said one banker, noting he expected borrowers to take advantage of the market in the next few weeks.
Potential deals could be expected from Chilean and Mexican corporates. There have also been a handful of rumors regarding sovereigns such as Colombia and Guatemala entering the market, said a syndicate banker.
Colombia has been considering the issuance of a new 30-year fixed-rate note that will be targeted at both foreigners and locals.
Panama-owned energy firm Empresa de Transmision Electrica is expected to wrap up roadshows by next week. While, Trinidad Petroleum Holdings also announced a debt exchange of its 9.75% 2019 and 6% 2022 bonds.
EQUITIES
It is peaking season for IPOs, with seven deals scheduled to debut this week, marking the largest week by number and the second-biggest on volume.
Turning Point Therapeutics, a clinical-stage biotech targeting oncology therapeutics, and earthquake-insurer Palomar Holdings debut on Nasdaq today.
Pinterest, the largest deal of the week, is gaining traction with the lead banks communicating this morning that pricing 75m shares is likely to come above the US$15-$17 indicative range.
Zoom Video Communications, the video collaboration software developer, is headed toward a similarly strong outcome, after investment banks leading its offering hiked talked to US$33-$35, from US$28-$32, while maintaining the offering size at 20.9m shares.
Brigham Minerals, an oil & gas mineral royalty, vaping products distributor Greenlane Holdings, and biotech Hookipa Pharma are all scheduled to price their IPOs after the market close today.
Turning Point avoided the crowded calendar by opting to accelerate pricing by one day.
Goldman Sachs, SVB Leerink and Wells Fargo placed an upsized 9.25m shares last night at US$18.00 apiece, the high end of a US$16-$18 target and a “double-sized” increase from the 7.5m launched that was later revised to 8.8m shares.
Turning Point is expected to open trading at 10:45am this morning under the symbol “TPTX”.
California property & casualty insurer Palomar Holding raised US$85m in its IPO last night.
Barclays, JP Morgan and Keefe Bruyette & Woods priced 5.6m shares at US$15.00, the low end of a US$15-$17 marketing range.
Palomar is expected to open trading at 10:20am this morning on Nasdaq under the symbol “PLMR”.