Lowe’s Cos, a home improvement retailer, is in the investment-grade bond market on Tuesday with a US$5bn five-part acquisition-related financing, one of at least 10 US dollar deals out to investors during what is already shaping up to be a busy week.
The market welcomed nine issuers on Monday, when volume totaled US$17.25bn, including the day’s biggest offering, a US$5bn three-part from semiconductor developer Broadcom, according to IFR data. An eager group of borrowers are well on their way to hitting high-grade syndicate supply forecasts of US$25bn–$35bn for the week.
Spreads – at or near all-time lows – are driving this momentum. The average spread to Treasuries for US investment-grade corporate bonds was 74bp on Monday, down from as high as 121bp in April, when a spate of tariff announcements from the White House disrupted global markets, ICE BofA data show.
These encouraging market trends are forcing companies to move up their financing plans rather than wait for investor sentiment to shift.
“With uncertainty out there – knowns and unknowns in terms of the geopolitical landscape, the macro landscape and central bank divergence – there are a lot of issuers trying to take chips off the table and issuing when they get periods of stability,” a DCM banker said on Monday.
“A lot of what we saw in August was a pull forward from September and a lot of what we have seen in September is a pull forward from the fourth quarter.”
Lowe’s, meanwhile, is taking advantage of market conditions to fund a planned acquisition of Foundation Building Materials via an US$8.8bn all-cash deal announced in August. On Tuesday, the company launched US$650m of two, US$750m of three, US$1.1bn of five, US$1.3bn of seven and US$1.2bn of 10-year notes at Treasuries plus 37bp, 47bp, 62bp, 67bp and 77bp, respectively. The spreads are about 28bp tighter than initial price thoughts.
Elsewhere, Italian energy giant Enel launched US$1bn three-year, US$1.25bn five-year, US$1.25bn 10-year and US$1bn 30-year tranches at plus 65bp, 80bp, 100bp and 112bp, respectively. The bonds came in 30bp–33bp tighter than IPTs. The deal is being sold through Baa1/BBB/BBB+ rated Enel Finance International.
The day’s other deals include trades from American Electric Power, Alliant Energy, COPT Defense Properties, Horace Mann Educators, Broadstone Net Lease, Nationwide Building Society, Gildan Activewear and CK Hutchison International.