Investors to Expect More High-Grade Bond Deals After Record Sales

(Bloomberg) -- After the post-Labor Day debt issuance frenzy, the U.S. investment-grade primary market will cool off a bit next week with borrowers looking to sell around $35 billion of bonds, according to early estimates from syndicate desks. High-yield note sales are expected to pick up after a slower restart following the holiday.

After the high-grade bond market’s busiest week in history, banks are pushing companies to pull forward deals that were expected to happen later in the year while the window is still wide open and before rates rise. Sales may jump higher if another jumbo deal surfaces after Walmart Inc. priced $7 billion of bonds on Wednesday to help lift total issuance to nearly $78 billion spread out over a record 54 deals during the four trading days.

Only about $5.74 billion of bonds have priced so far in September in the U.S. high-yield market where expectations for issuance had been as high as $60 billion for the month. Bank of America Corp. strategists cut their sales forecast to $40 billion on Friday, down from $47 billion.

Junk-bond deals for next week include Platinum Equity’s $2.4 billion offering split between euros and U.S. dollars to fund the acquisition of specialty chemicals manufacturer Solenis. Unifrax Corp., an insulation products maker, is selling $1.2 billion to fund its acquisition of Lydall Inc., a materials manufacturer.

The U.S. leveraged loan market has already had one of its busiest post-Labor Day sprints in recent memory with at least 29 borrowers announcing new deals this week. The next five business days includes eight lender meetings so far, including one on Monday for Pactiv Evergreen’s loan that will help fund its acquisition of Fabri-Kal Corp. ConnectWise LLC meets with investors the same day for a $1.05 billion offering that will go toward refinancing unitranche debt.

In distressed debt, Talen Energy’s interest payment on unsecured notes due in 2024 is set for Sept. 15.

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