ION to Wrap Up $850 Million Shelved Deal: U.S. Credit Week Ahead
(Bloomberg) -- The U.S. leveraged loan market isn’t taking a breather after seeing nearly $120 billion of deals launched so far this year.
ION Analytics is looking to raise $1.9 billion-equivalent in euros and dollars to refinance existing debt in a resurrected loan it had pulled in November. Rent-A-Center Inc. is marketing a loan to help fund its acquisition of Acima Holdings, and a junk bond issue is expected to emerge as part of the financing. Leveraged loan funds have taken in cash for seven of the last eight weeks as Treasury yields rise, according to Refinitiv Lipper.
No lender meetings are scheduled for the week of Feb. 1, but about $22 billion is due in commitments.
In other kinds of risky debt, the junk bond pipeline is empty next week, just after setting a new record for busiest January ever.
“I would expect issuance to slow down as the market has pulled back this week and we have already been at a record January pace,” said Steven Oh, global head of credit and fixed income at PineBridge Investments.
Volumes have risen even as retail investors yanked cash from U.S. high-yield funds for the fourth straight week, the Lipper data show. But many deals are still seeing demand that far exceeds the amount of debt offered as yields continue to trade at historically low levels. Average U.S. junk bond yields are 4.24%, hovering near the record low set last week, while those in Europe are paying 3.39%, also close to an all-time low.
In the U.S. investment-grade market, an informal survey of dealers is forecasting $30 billion of supply in the coming five trading days and between $90 billion and $130 billion of sales for the month of February.
7-Eleven Inc. led other blue-chip companies in borrowing $127.5 billion this month, according to data compiled by Bloomberg. The convenience store’s debut jumbo deal to help fund its acquisition of Speedway gas stations in the U.S. marked the largest in the corporate dollar bond market globally since a $12 billion sale from Verizon Communications Inc. in November. The 7-Eleven sale was nearly six times covered at its peak, benefiting from cash-rich investors despite a meltdown in equities.
Yankee banks reporting earnings next week include BNP Paribas SA, Deutsche Bank AG, Banco Santander SA and Itau Unibanco Holding SA. With renewed lockdowns and virus concerns in Europe, JPMorgan Chase & Co. will be closely monitoring guidance or disclosures on asset quality, credit analysts led by Eric Beinstein wrote in a note on Friday.
“Investors will also be listening for FY21 issuance guidance for the European and U.K. banks, which is typically released with fourth-quarter results,” wrote the analysts.
Five of the six biggest U.S. banks have raised $24 billion, nearly double the $12.35 billion of bonds printed last January, Bloomberg data show. JPMorgan borrowed $5 billion in a two-part transaction Thursday.
Some energy giants are also set to unveil their quarterly reports, making them candidates to sell bonds thereafter. Junk-rated Alliance Resource Partners kicks it off on Monday and Peabody Energy Corp. will follow on Thursday. Energy companies have already been active borrowers this past month, with crude oil prices rallying above $50 a barrel and strong demand allowing them to boost the size of their bond offerings.
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