Wall Street syndicate offices expect a supply of quality bonds of around $ 20 billion next week, according to an informal survey of debt underwriters.
That figure would be enough to exceed dealers’ September issue estimates of around $ 140 billion. Sales volume faltered after a record week earlier this month. This week has seen two different issue-free days, with the Evergrande group’s debt crisis in China and the FOMC meeting leading to uncertain conditions for Monday and Wednesday offers.
The companies that have stepped forward find the market a little more difficult than it was just a month ago. The seven issuers on Thursday saw their order books covered 2.5 times on average, less than the average of 3.1 times over the year. Despite this, with the recent market turmoil, it could be worse.
“In light of recent macroeconomic developments, we believe the overall environment remains favorable for credit,” Barclays Plc strategists led by Bradley Rogoff wrote in a report on Friday. pantyhose the rise may be limited, and we expect the spreads to widen slightly towards the end of the year. ”
This sentiment was echoed by strategists at JPMorgan Chase & Co. on Thursday, who said short-term credit hedges might be appropriate given the downside potential greater than Evergrande’s situation and questions about the market. US debt ceiling.
Junk Bond investors await the launch of $ 4 billion in unsecured notes and $ 3.8 billion in bonds guaranteed by Medline Industries Inc. to help fund its debt buyout by Blackstone Inc., Carlyle Group and Hellman & Friedman.
Medline is also selling a $ 6 billion leveraged loan, the largest buyout funding since 2018, plus a loan equivalent to $ 1 billion in euros. Entries are due September 30.
Ahern Rentals Inc., a company that leases tools and heavy machinery, closed an investor appeal on Thursday and is marketing $ 550 million in junk bonds until next week.
Three leveraged loan meetings are scheduled for the week, including one for a $ 415 million loan helping fund the leveraged buyout of Trace3, an IT services management company. Meetings will also be held for All My Sons’ $ 405 million bid for the recapitalization of the business and the $ 315 million loan from USNR. And next week, 15 transactions totaling $ 18.5 billion are expected to be priced, including Medline.
Bank of America Corp. sees a “darker” macroeconomic outlook weighing on high yield spreads going forward.
“We now believe the window for further spread compression has largely closed,” strategists led by Oleg Melentyev wrote on Friday, adjusting the bank’s forecast for high yield spreads wider by 50 percentage points. based.
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