U.S. Corporate Bond Sellers Are Preparing an Onslaught of Deals

U.S. corporate bond markets are primed for an avalanche of sales as companies report earnings after the presidential election dampened issuance last week.

Blue-chip issuers maysell $30 billion in debt this week, including as many as 10 bonds on Monday alone, according to an informal survey of high-grade dealers. It would be the first day with a double-digit deal count since Sept. 29, and a stark turnaround after just one company sold debt last week.

In leveraged finance, a surge of sales may kick off this week ahead of Thanksgiving Day in late November, market participants said. Junk bonds could see a couple of weeks of issuance exceeding $10 billion dollars while more than 20 leveraged loan deals may launch before the holiday.

In high-grade,Waste Management Inc. raised $2.5 billion last week to repay a revolving credit facility,scoring some of its cheapest borrowing costs ever just months after burning investors with a controversial debt redemption. The bondstraded tighter in the secondary market, potentially flashing a greenlight to issuers contemplating deals.

“We have a number of issuers who’ve indicated, if there is stability post election, that they want to come to market and take advantage of the positive technicals and the resilience in spreads,” said Stephen Philipson, head of fixed income and capital markets at U.S. Bancorp.

Corporate earnings continue this week, potentially freeing up companies such asMcDonald’s Corp.,Walt Disney Co. andCisco Systems Inc. to sell debt.

Private credit vehicles called business development companies will also report earnings, with $7 billion lenderFS KKR Capital Corp. among the pack. Aside from freeing the firms to sell debt, the dispatches will provide a peek into the $850 billion private debt market, which is seeing adecline in loan amendments and apickup in activity.

Creditrallied last week as the prospect of a Joe Biden presidency and Republican controlled Senate would likely cap any significant regulatory overhauls and limit massive debt-funded stimulus, keeping rates suppressed.

Pacific Investment Management Co. isadding exposure to travel and tourism debt in anticipation of a coronavirus vaccine in the near future, according to Mark Kiesel, chief investment officer for global credit at the $1.9 trillion money manager.

Record-Low Yields

The pipeline for high-yield debt sales was quiet as of Friday, but that could change quickly as opportunistic issuers seek to take advantage of low borrowing costs. As of Friday,yields for junk-rated bonds were just 10 basis points off the record low of 4.83% set in June 2014, according to Bloomberg Barclays index data.

In the leveraged loan market,Centerfield Media has an investor call scheduled on Monday for its $500 million interm loans to help refinance existing debt.Potters Industries LLC also has a call with investors that day for its $390 millionoffering. Commitments on that deal are due Nov. 19.

Debt sales forBlackstone Group Inc.’s acquisition ofAncestry.com Inc. isamong the offerings that could kick off in the coming weeks if the tone in credit markets remains positive.

Finally, in the distressed debt world, the final tender deadline forRevlon Inc.’s bond exchange comes Tuesday, Nov. 10, after investors submitted just over 36% of eligible bonds as of last week.

— With assistance by Michael Gambale, Lara Wieczezynski, Kelsey Butler, Katherine Doherty, and Davide Scigliuzzo

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