IFR SNAPSHOT - Robust IG primary offers at least 10 offerings today
The US investment-grade primary remains robust and prolific, with at least 10 offerings out for pricing on Wednesday following the eight issues sold yesterday.
With markets now running on more of an even keel in the wake of Monday's tariff-induced ructions, issuers are more comfortable diving into the primary, where eager investors await them.
"After a tricky few days for markets, the last 24 hours saw things begin to stabilise again, with most asset classes unwinding the tariff-driven moves around the weekend," Deutsche Bank Research said in a report today. "There wasn’t a single factor driving the moves, but investors have grown hopeful that the tariff delays for Mexico and Canada will mean that tariffs are ultimately avoided, whether that’s via further delays or some kind of deal."
The high-yield arena is also active again for the third straight session, with one offering expected to price.
Wednesday's slate of economic data releases includes the ADP Employment Report at 8:15am New York time, international trade figures at 8:30am, the revised January S&P Global Services PMI at 9:45am and the ISM Services PMI at 10:00am. Four Fed speakers are also expected to make appearances during the day.
On Tuesday, eight IG issues were priced totaling US$14.365bn to kick off February's IG issuance, according to IFR data. The average new issue concession for Tuesday's IG issues was 2.20bp and the average order book was 4.98x subscribed, according to the data. The average move from initial price thoughts to pricing was 29.29bp.
"Yesterday’s supply was heavily skewed toward BBB rated borrowers, with just over $12bn (84%) of the slate in the lowest rung of IG," BMO said.
Over in the HY primary, three offerings were priced totaling US$2bn, lifting weekly and February HY volume to US$6.324bn.
The average IG bond spread narrowed by 1bp to 82bp on Tuesday and the HY bond spread edged in 2bp to 271bp , according to ICE BofA data. US yields across asset classes edged lower yesterday.
"High grade spreads narrowed 0.5-1bp at the index level yesterday as the market got a reprieve from tariff headlines, with client activity in the secondary market remaining skewed toward better buying despite the return of primary market supply," BMO said.
HIGH GRADE
The US investment-grade bond market is shaping up to have another busy session on Wednesday, with at least 10 offerings expected to price.
Citigroup is marketing perpetual preferred stock, making it the third of the big US banks to raise Tier 1 capital in the high-grade market. Swiss bank UBS is issuing a two-part Additional Tier 1 offering, comprising perpetual non-call five and perpetual non-call 10 tranches.
International Business Machines is issuing three, five, seven, 10 and 30-year senior unsecured notes, after pricing a multi-tranche €3.5bn bond in euros today.
REIT Healthpeak OP is looking to raise US$400m from a 10-year senior unsecured bond. Elsewhere, the financing entity for hedge fund manager Citadel is marketing a five-year senior bond.
PepsiCo, US Bancorp and Pacific Life are also in the market. Latin America is contributing to today's supply flurry as well, with Minera Mexico and BBVA Mexico issuing bonds.
LEVERAGE/HIGH YIELD
The pipeline for US high-yield bond offerings continues to grow, with TransMontaigne Partners becoming the latest borrower to announce a deal.
The transportation and storage company is out with a US$450m 5.25-year non-call two senior note as it seeks to repay debt. Pricing is expected on Thursday.
Meanwhile, Long Ridge Energy is scheduled to wrap up marketing today on a US$500m seven-year non-call three issue.
The gas and power company will use proceeds to refinance a term loan, make payments on commodity hedges and fund reserve accounts.
Data provider Kantar is also preparing a euro and dollar bond sale that includes a five-year non-call two tranche that has a minimum size of US$500m and could price as soon as today.
STRUCTURED FINANCE
More asset-backed offerings are slated to price today after a flood of 11 deals brought in more than US$10bn yesterday.
General Motors is poised to price its first auto lease securitization of the year this morning. The US$1.69bn issue was launched yesterday and was increased from US$1.43bn. The US$632.7m Triple A rated two-year tranche was launched at US Treasuries plus 52bp, which was tighter than price guidance of plus 57bp-59bp.
Outside of the auto sector, KKR-backed CyrusOne announced a US$575m green data center bond. The five-year Single A rated security is expected to price by the end of the week.
Another data center operator, Switch, is in the CMBS market, seeking to finalize its US$2.4bn green deal, which would be the biggest ever ESG offering backed by data centers in the format.
The commercial property primary is also contending with three conduit offerings, which together are expected to raise over US$2bn.
LATAM
Mexican corporate issuers continue to enter the primary market for dollar bonds despite the ongoing tariff turmoil.
Minera Mexico is expected to price a seven-year senior unsecured note via Barclays, Bank of America, Morgan Stanley and Santander. Price thoughts are in the 175bp area over US Treasuries.
BBVA Mexico is back with a Basel III-compliant Tier 2 offering, with plans to price today. Price thoughts on the 10-year non-call five note are in the very low 8% area. BBVA, Bank of America, Credit Agricole and JP Morgan are the bookrunners.
Yesterday, Mexican power generator Saavi Energia raised US$1.1bn, pricing the 8.875% 10-year non-call five senior unsecured notes at a yield of 9%. JP Morgan, Mizuho, Scotiabank and SMBC were the global coordinators.
Today, Brazilian environmental management company Ambipar said it will buy back US$197m of its 9.875% green notes due 2031. Yesterday was the early deadline of the tender offer. The buyback is capped at US$200m.
EQUITIES
Contractor Karman Space & Defense launched an up to US$421.1m NYSE IPO, joining a short list of companies looking to go public before third-quarter financial results go stale next week.
Citigroup and Evercore are leading the sale of 21.1m shares in the maker of hypersonic missile and space launch systems at US$18-$20 for pricing next Thursday, February 13.
The offering comprises a mix of 8.4m primary shares and 12.6m from selling shareholders led by private equity backer Trive Capital Management.
Karman’s roadshow comes a day after security software firm SailPoint launched a US$1bn Nasdaq IPO earlier this week for pricing on Wednesday, February 12.
This week’s IPOs from Sionna Therapeutics (US$159m) and Titan America (US$432m) are both oversubscribed ahead of pricing late Thursday.
The delayed US$66m Nasdaq IPO of UK software firm RedCloud is also on track to price after Wednesday’s close.
ECM activity is predictably light with quarterly earnings season in full swing, though there are a handful of deals in the market.
GH Research secured US$150m from a follow-on stock sale to fund its psychedelic approach to treating depression.
After a day of marketing, Cantor, Stifel and RBC Capital Markets priced 10m shares of the Irish biotech at US$15, nearly a 17% file-to-offer discount.
Some profit taking was to be expected.
On Monday, GH shares soared 70% after reporting promising Phase IIb trial results showing its inhaled formulation of a naturally occurring psychedelic providing fast relief for patients with treatment-resistant depression.
This week’s largest follow-on comes from Mexico via BBB Foods, which is on track to price a circa US$545m deal later tonight.
JP Morgan and Morgan Stanley are leading an all-secondary offering of 17.5m shares on behalf of selling shareholders.
Shares of the Mexican grocery chain fell 5.9% to US$29.39 on Tuesday, the first day of a two-day marketing effort.
BBB shares are still comfortably above their NYSE IPO price of US$17.50 struck in early February last year.