The pace of issuance is not letting up in the US investment-grade corporate primary on Wednesday, with at least 11 issues slated for sale following the 18 offerings sold yesterday.
In the high-yield primary, two offerings are expected to price today.
In the ECM arena, US syndicate desks were busy launching several large offerings late Tuesday, including a convertible from Strategy (previously MicroStrategy) and a secondary offering of Waystar shares.
A handful of economic data releases are out this morning, with housing starts and building permits unveiled at 8:30am New York time.
Markets and investors will be particularly attentive when the Federal Reserve publishes the minutes from the January 28-29 FOMC meeting at 2:00pm.
"Today’s focus will likely be this afternoon’s release of the Minutes from the January FOMC meeting where market participants will gain greater insight into the discussion surrounding the potential for future rate cuts," BMO said in a report today. "We will also be on the lookout for any mention of deregulation and/or the balance sheet with Chair Powell’s testimony before Congress last week reiterating that reserves remain abundant."
This morning US stocks opened lower while US Treasury yields are in a range, with the 10-year note yield hovering around 4.55%.
In US stocks yesterday, the S&P 500 in a late rally reached a new all-time high, surpassing its previous record from January 23, Deutsche Bank Research said in a report today. The gains were fairly broad, with more than 70% of the S&P 500 higher on the day and the Russell 2000 up 0.45%.
US Treasuries, however, struggled in the holiday-shortened week yesterday, with the 10-year yield up 7.4bp on the day to 4.55%, Deutsche Bank said. Possibly pushing yields higher, Deutsche Bank noted, was the reaction to remarks from a Fed official on Monday that reiterated the message that the Federal Reserve was in no hurry to adjust policy, as well as the over US$30bn slate of IG corporate bond issuance on Tuesday, which may have also added upward pressure on yields.
In the IG primary on Tuesday, 18 offerings were priced totaling US$31.5bn, lifting February volume to US$92.215bn, according to IFR data. The average new issue IG concession on Tuesday was 1.44bp and the average order book was 4.48x, according to the data. The average progression from initial price thoughts to pricing was 28.07bp tighter.
"Coming into the week, consensus projections suggested approximately $40bn in IG supply, a number that could easily be surpassed today with nine borrowers reported to be eyeing the market this morning," BMO said.
"By both total volume and deal count, yesterday is the largest day in terms of IG supply since January 6, the first Monday of the year, which saw 26 borrowers combine for $38.45bn in IG issuance."
In the HY primary yesterday, one offering was priced totaling US$1bn, pushing February HY volume US$16.766bn.
The average IG bond spread edged in by 1bp to 79bp on Tuesday and the HY bond spread was unchanged at 262bp, according to ICE BofA data. US yields across asset classes were higher yesterday.
"IG index spreads narrowed 1bp during yesterday’s session headlined by extremely strong supply in the primary market," BMO said.
"On a sectoral level, yesterday’s narrowing in spreads was relatively uniform with most major sectors 1-2bp narrower as yesterday’s headlines regarding 25% tariffs on autos, semiconductors, and pharmaceuticals doing little to dent demand for the potentially affected sectors."
HIGH GRADE
The US investment-grade bond market will stay busy on Wednesday, with another 11 offerings expected to price today on top of yesterday's 18 transactions.
Confectionery company Hershey is marketing a four-part senior unsecured bond, including three, five, seven and 10-year tenors.
Golub Private Credit Fund is preparing an offering of five-year senior notes. Travel website Expedia, car retailer AutoNation and homebuilder DR Horton are all issuing 10-year senior unsecured notes.
TransCanada Pipelines is issuing a 40-year non-call five junior subordinated note, an atypical structure for a US dollar hybrid.
Technology company Cisco Systems is marketing a five-part bond, with maturities ranging from three to 30 years. Pest control company Rollins and Kraft Heinz Foods are also in the market today.
There is also some FIG issuance from UK bank Barclays and US regional lender Huntington National Bank.
LEVERAGE/HIGH YIELD
Junk-rated borrowers continue to bring deals to the primary market, with at least two bond sales on the slate today.
First Quantum Minerals, a Canadian copper producer with mines in Latin America and Africa, is back in the market on Wednesday to refinance an upcoming debt maturity.
The borrower has set initial price thoughts in the mid 8% area on a US$750m eight-year non-call three offering ahead of expected pricing today.
Food and drug retailer Albertsons is also readying pricing today on a US$600m eight-year non-call three bond. Proceeds will be used to redeem its 7.5% 2026 notes.
STRUCTURED FINANCE
The asset-backed primary market is slowly swinging back into action this week after one deal priced on Tuesday, a US$766m revolving prime auto loan trade from frequent issuer General Motors.
Elsewhere, Toyota is preparing a US$1.3bn auto lease securitization, with price guidance on the largest tranche, the US$537m Triple A portion, at Treasuries plus 55bp-57bp.
In the consumer loan segment, Social Finance is working on a US$697.6m issue and Affirm is readying a US$750m deal from its new master trust. Meanwhile, T-Mobile is poised to price a US$500m offering backed by wireless equipment installment plans.
The aircraft sector is also active, with a US$582.9m bond from a KKR-Altavair venture and a US$600m deal from a Pimco-AerCap partnership.
As for commercial mortgage-backed securities, there are several single-borrower single-asset offerings in the works, led by two jumbo bonds from Blackstone – a US$2bn data center issue and a US$2.8bn deal to finance its acquisition of shopping center operator Retail Opportunity Investments.
LATAM
Two Latin American companies are marketing potential bond offerings. Itau Unibanco mandated Itau, Bank of America, Citigroup, JP Morgan and UBS to arrange meetings with investors starting today for a potential benchmark-sized five-year dollar-denominated senior unsecured note offering.
Raizen initiated meetings with investors yesterday to discuss a potential benchmark transaction comprising a new 12-year dollar-denominated senior unsecured bond as well as a new 30-year or a tap of an existing bond with a similar maturity. Bank of America, Citigroup, Itau, JP Morgan and Morgan Stanley are the global coordinators.
Yesterday, Paraguay launched an offer to buy back its outstanding US$332m 5% notes due 2026 and US$500m 4.7% notes due 2027. The tender offer, which expires February 24, is conditioned on the concurrent closing of one or more series of new global bonds.
Dominican Republic yesterday raised the equivalent of US$5bn from a three-part transaction. It priced at par a US$2bn 6.950% bond due 2037, a US$1bn 7.150% bond due 2055 and Ps125bn (US$2bn) 10.5% bonds due 2037. Citigroup and JP Morgan were the bookrunners.
For its part, Brazil raised US$2.5bn from a 6.625% 10-year bond, pricing it at a yield of 6.75% or 220bp over US Treasuries. Bradesco, JP Morgan and Morgan Stanley were the bookrunners.
EQUITIES
US ECM syndicate desks made the most of a holiday-shortened week by launching several large offerings late Tuesday.
Billionaire bitcoin fanatic Michael Saylor’s renamed Strategy (previously MicroStrategy) returned to the CB market with a new US$2bn five-year convertible bond to fund the purchase of more bitcoin, extending a flurry of funding activity that has made the company the market’s most prolific equity-linked issuer and one of Wall Street’s biggest fee payers.
Morgan Stanley, Barclays, Citigroup and Goldman Sachs are marketing the new security across Wednesday’s session with a fixed zero percent coupon and 40%–50% conversion premium.
Sponsor-backed healthcare payments firm Waystar followed up Tuesday morning’s better-than-expected fourth-quarter numbers by launching a roughly US$800m first-time secondary stock sale.
A syndicate led by JP Morgan, Goldman Sachs and Barclays, the same banks that led Waystar’s US$967.5m Nasdaq IPO last June, are undertaking two days of marketing before pricing the sale of 10.5% of outstanding late Thursday.
The offering is 100% secondary on behalf of sponsors EQT, the Canada Pension Plan Investment Board and Bain Capital. The sellers are capitalizing on a 109.8% share price run-up since Waystar went public at a US$21.50 IPO price in June last year. Waystar closed Tuesday’s session at US$45.11.
Early on Wednesday, LSE/NYSE-listed E&P Diversified Energy launched a US$140m one-day marketed stock sale to help fund its US$1.3bn acquisition of Maverick Natural Resources, which was unveiled last month. Citigroup and Mizuho are leading the offering.