After 72-Hour Binge, U.S. Corporate Bond Sales Grind to Halt
(Bloomberg) -- After a wild three-day borrowing party, the U.S. corporate credit markets are showing signs of a hangover.
Bank syndicate desks pushed investors’ appetite to the limit with a torrid pace of 38 investment-grade deals this week. High-yield issuers also came out in force.
By Wednesday, investor fatigue had set in. Pricing outcomes for the day’s investment-grade deals were mixed, with some borrowers paying higher concessions and several deals barely moving from initial price talk, Bloomberg strategist Brian Smith wrote.
Read more: IG ANALYSIS: Bond Sale Blitz Takes Toll as Investors Get Pickier
No high-grade issuers came forward Thursday, and the primary markets may finally be winding down for a summer lull, with little activity expected until after Labor Day.
In the high-yield sector, companies are plowing ahead with deals in what may be the last hurrah of summer. Carvana Co. and SeaWorld Parks & Entertainment Inc. are in the market with bond offerings Thursday.
With high-yield borrowing costs trending up, issuers could be looking to get deals done before things get worse. The average junk-bond yield has climbed in recent days to 4.12% -- the highest level since May 21.
Retail investors may be taking notice of the improving yield. High-yield mutual funds and exchange-traded funds have experienced cash inflows of $425 million between Thursday and Wednesday, according to estimates from JPMorgan Chase & Co. analysts, citing Refinitiv Lipper data. The funds posted an outflow the week before.
Weekly high-grade bond sales have eclipsed $40 billion for just the seventh time this year.
- Eldorado Gold is set to price its $500 million sale of eight-year high-yield debt Thursday that will help fund the redemption of second-lien notes, while marketing agency Stagwell Media’s first bond sale since March of 2016 may also wrap up
- At least 11 companies have commitments for leveraged loans due Thursday, the busiest day for scheduled closings since June 30, according to data compiled by Bloomberg
- Purdue Pharma and its owners, members of the Sackler family, are nearing the end of their decades-long association with opioids, seeking court approval to pay billions of dollars and walk away from the business that helped make their fortune
- For deal updates, click here for the New Issue Monitor
- For more, click here for the Credit Daybook Americas
Europe’s primary market saw no action on Thursday, marking a 10th day this year with no deals.
- Weekly sales tally has reached EU3.07b, mainly due to the 4-part deal from U.S. medical technology firm Becton Dickinson and Co. on Tuesday
- Goldman Sachs will lead a 1 billion-euro ($1.2 billion) syndicated credit facility to fund CVC Capital Partners’ investment in Spain’s top soccer league
At least three major creditors to China Evergrande Group have given it more time to repay maturing loans, according to people familiar with the matter, offering some relief for the cash-strapped developer as it fends off a string of demands for unpaid dues.
- China’s central government has instructed authorities in Guangdong province to map out a plan to manage Evergrande’s debt problems, including coordinating with potential buyers of its assets, according to people familiar with the matter
- Indian groceries-to-fashion conglomerate Future Group has assured lenders that a unit that missed a $14 million bond coupon payment will pay the obligation before the grace period ends later this month, people familiar with the matter said.
- Southeast Asian dollar junk credit market has outperformed investment grade bonds recently on renewed risk appetite as investors bet the worst of the virus resurgence in the region may be over
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