U.S. Corporates Ready $30 Billion of Bond Sales After Earnings


Investment-grade primary sales are projected to remain strong next week, with syndicate desks estimating about $30 billion in fresh supply, according to an informal survey of debt underwriters. More corporate deals are expected to come forward as companies emerge from earnings-blackout periods.

Banks have anchored high-grade issuance over the past two weeks, with Citigroup Inc. and Wells Fargo & Co. the only two of the top six U.S. banks yet to issue new bonds after reporting earnings.

High-grade debt continues to recover from the pandemic crisis, with agencies improving their ratings or outlooks on $128 billion of IG index debt in the week ended April 22, Citigroup strategists led by Daniel Sorid wrote.

M&A activity also remains robust, which may boost new bond supply. Investment-grade issuer Panasonic Corp. agreed last week to take over U.S. artificial intelligence software developer Blue Yonder Group Inc. for $7.1 billion. The deal will be partially financed with a bridge loan that will be refinanced with hybrid financing, according to a statement.

High Yield

The high-yield calendar is light heading into the week, but the issuance backdrop remains strong.

Helios Software Holdings Inc., also known as ION Corporates, is set to price a $350 million 7-year junk bond on Monday, the only deal known to be in the high-yield pipeline.

Strong growth, continued low-cost borrowing and an oil rally are all contributing to a friendly backdrop for high-yield issuance. This week, junk-rated U.S. companies set a record for most bonds ever sold in April, capping a 12-month issuance boom. The month’s supply currently stands at more than $40 billion.

Next month has the potential to be even busier.

“May is seasonally the strongest month of high-yield issuance,” Bank of America Corp. strategists led by Oleg Melentyev wrote in a report Friday. BofA is projecting $47 billion of high-yield supply next month.

U.S. Corporates Ready $30 Billion of Bond Sales After Earnings

Barclays Plc sees an “extremely benign default environment” for high-yield bonds and leveraged loans in 2021, driven by better expectations for U.S. GDP growth, looser lending standards and strong new issue markets, strategists led by Bradley Rogoff wrote Friday.

Loan launches slowed this week, with most deals earmarked to fund acquisitions and buyouts. Loan funds continue to see robust demand, posting a $1 billion-plus inflow for the third week in a row, according to Refinitiv Lipper. That’s the first time this has happened since December 2016, the data show.

In distressed debt, mall owner Washington Prime Group’s amended forbearance agreement is set to expire in the middle of next week pending a further extension. Voyager Aviation Holdings also faces a deadline on its debt exchange offer that expires Monday.

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