The US investment-grade primary expects just three offerings today, including one of the Big Six US banks, as markets continue to gyrate on economic uncertainty and tensions in the Middle East.
"Markets have been doing the 'Do-si-do' this week as initial recoveries have given way to sell-offs as rates and concerns over events in the Middle East dominate, while weaker tech sentiment was a major driver yesterday as the day progressed," Deutsche Bank Research said in a report today.
The high-yield corporate primary is quiet today.
There are four US economic data releases today including jobless claims, the Philly Fed manufacturing surveys, existing home sales and leading Indicators.
"This morning’s Goldman Sachs announcement ensures that this will become the eleventh consecutive week in the IG market to see realized supply exceed projections given expectations for US$31-$32bn in supply coming into the week," BMO said in a report today.
On Wednesday two IG offerings were priced totaling US$9bn, including an offering from Morgan Stanley, lifting weekly IG issuance to US$29.25bn and April IG volume to US$73.73bn, according to IFR data.
"Reception to yesterday’s deals was mostly in-line with the demand seen by this week’s other large bank borrowers," BMO said. "Average new issue concessions remained in the 5-6bp neighborhood, though yesterday did see an improvement in order book coverage with the five tranches coming an average of 3x oversubscribed."
In the HY primary three issues were priced totaling US$2.275bn yesterday, IFR data show.
The average IG bond spread remained unchanged at 95bp on Wednesday and the HY bond spread widened by 6bp to 342bp, according to ICE BofA data.
"IG index spreads were mostly unchanged during yesterday’s session, though tone remained on the softer side," BMO said. "Part of that is likely attributable to the release of the Fed’s beige book which painted a somewhat bleaker picture for the economy than recent economic data would suggest."
Separately, Reuters reported that US Treasury Department TIC data released on Wednesday showed foreign buying of US corporates and agencies persisted in February, with inflows of US$52.7bn and US$3.7bn, respectively.
Foreign holdings of US Treasuries surged to a record in February, its fifth straight monthly rise, totaling US$7.965trn, up from a revised US$7.945trn in January. Also, US equities showed a minor inflow of US$400m in February, compared with outflows of US$15.4bn in January, Reuters reported.
"Foreign buyers are the largest single owner of corporate bonds from a sector standpoint, holding 25% of the outstanding corporate market," BMO said.
"After adding US$20bn in corporate debt during January, foreign buyers increased corporate holdings by US$52.7bn in February, the largest inflow into corporates from foreign accounts since August."
"European investors were the largest source of demand for corporates during February according to the TIC data, with Europe accounting for $20bn of the corporate inflow, though $7.6bn of that is attributable to Luxembourg," BMO said.
HIGH GRADE
At least three US high-grade bond offerings are set to price on Thursday.
US investment bank Goldman Sachs is selling six-year non-call five and 11-year non-call 10 senior unsecured notes in a fixed-to-floating rate format. This is the second time the US investment bank is issuing bonds this week, after it printed a US$2.25bn perpetual preferred on Tuesday.
Including the deal from Goldman Sachs today, four of the so-called Big Six US banks have come to the market with senior holdco offerings.
Outside the global US systemically important banks, US regional lender Citizens Financial Group announced an 11-year non-call 10 senior bond deal for today.
From Asia, Korea-based LG Electronics launched a US$800m two-part senior unsecured bond, split into US$500m three-year and US$300m five-year tranches. The five-year is a sustainability bond that will be used for financing green or social projects.
LEVERAGE/HIGH YIELD
Three companies raised US$2.275bn in the high-yield market on Wednesday. The biggest of yesterday’s haul came from Jane Street. The New York-based trading house printed an upsized US$1.4bn seven-year non-call three senior secured note at 7.125%.
Wednesday’s other two deals came from Empire Communities and Tutor Perini.
Meanwhile, there are still two trades in the high-yield bond pipeline. Six Flags is working on an US$850m offering of eight-year non-call three senior secured notes for this week, and Brightline East preparing a US$1.25bn offering of notes due January 31 2030 for pricing next week.
STRUCTURED FINANCE
Mortgage issuers account for the majority of the deals left on this week's calendar now that most of the ABS offerings were completed.
A group comprising JP Morgan, Morgan Stanley, Wells Fargo and Bank of America is preparing to raise US$888.35m via a five-year fixed-rate conduit CMBS issue.
Commercial mortgage lender Argentic seeks to price a US$585.14m CRE CLO offering.
Yesterday, Tishman Hotel and MetLife did a US$735m refinancing on their three resorts within the Walt Disney World Resort in Florida. The floating-rate offering's US$516.63m Triple A rated tranche came in at SOFR plus 145bp, following guidance of 150bp area.
In the residential space, Pretium is in the market with a US$383.48m re-performing mortgage deal, while Woodward Capital has been showing investors a US$447.61m securitization backed by home equity loans originated by Rocket Mortgage.
Meanwhile, the asset-backed primary is on track for its busiest week in a month with over US$8.4bn in supply hitting the market, IFR data show.
Dealmakers are starting to line up ABS issues for next week. This morning, Enterprise has begun marketing a US$1.25bn auto fleet offering.
LATAM
Peru's Aenza is holding meetings with fixed income investors for a proposed offering of up to US$350m of senior secured notes maturing in 2029 or 2031. The infrastructure concessions conglomerate hired Bank of America, BTG Pactual, HSBC, Natixis and Santander to lead the transaction.
Moody's and Fitch respectively assigned B1 and BB- ratings to the proposed bond.
LatAm sovereign five-year CDS yesterday tightened 2bp for Mexico and Chile, moving little elsewhere in the region, according to Lucror Analytics.
EQUITIES
Ibotta and Centuri both produced strong pricing outcomes from their NYSE IPOs late Wednesday, highlighting their insulation from the sticky inflation/higher-for-longer interest rate concerns and geopolitical angst weighing on markets.
After drawing heavy oversubscription levels, a syndicate led by Goldman Sachs, Citigroup and Bank of America raised US$577m from the sale of 5.6m primary and secondary Ibotta shares at US$88, well above the US$76-$84 range.
Shares in the consumer rewards app/platform will begin trading on the NYSE late on Thursday under the ticker “IBTA”.
Centuri overcame the weak stock price performance of its closest peers during the roadshow to sell 12.4m shares at US$21, the top of the US$18-$21 range.
UBS, Bank of America and JP Morgan led the carved-out Southwest Gas utility services unit's offering, which defied a 10%-plus decline in the shares of key comp Mastec during the roadshow period.
As previously flagged, corporate raider Carl Icahn, a major Southwest shareholder and agitator for its breakup, bought 2.6m shares at the offering price via a separate private placement for additional proceeds of US$54.4m.
The IPO cut Southwest’s stake to 82.7%, a position it will look to sell over time via secondary or possibly a tax-free spin of some or all of the shares to its own investors.
Centuri shares will start trading on the NYSE later Thursday under the symbol “CTRI”.
Lithium Americas plugged a significant funding hole for its Nevada mine by raising US$275m late Wednesday from an overnight stock sale.
After an earlier wall cross, Evercore, Goldman Sachs and BMO Capital Markets priced 55m shares at US$5, the bottom of the US$5-$5.50 marketing range and nearly a 25% discount to Wednesday’s closing price of US$6.63.
Despite the sector's recent underperformance, biotech remains an ever-active source of ECM activity. Two follow-on stock sales priced last night, though both were heavily supported by existing shareholders.
Biohaven raised an upsized US$230m of equity late Wednesday, though aided by management investing US$62m (including US$5m from chief executive Vlad Coric).
JP Morgan, Morgan Stanley, TD Cowen and Piper Sandler priced the sale of 5.6m shares in the neurology-focused biotech at US$41, a 6.9% discount to the US$44.03 closing price.
With nearly a third of the offering already spoken for and after an earlier wall-cross, the banks found enough demand to upsize the offering from US$200m at launch.
Biohaven is the fifth biotech follow-on of the second quarter, joined by Intra-Cellular Therapies, which raised US$500m late Wednesday from a one-day marketed follow-on offering.