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Frenzied Issuance Drives Hi-Grade Bond Mart To 3rd-Highest Tally Ever

The high-grade primary market, sandwiched between this year's particularly pernicious August doldrums and next week’s holiday- and FOMC-dominated calendar, has produced epic volume this week, including today’s $24.8 billion slate of deals that ranks as third most for any session on record, LCD data show.

Today’s total, which comes after nearly $13 billion was placed yesterday, is the highest since March 3, when Actavis Fundingprinted a $21 billion deal backing its mammoth acquisition of Allergan, leading a slate that totaled more than $31 billion. That session’s total ranks second only to the $49 billion printed on Sept. 11, 2013 via the largest single corporate offering on record, from Verizon Communications.

(Note: LCD totals exclude sovereign, quasi-sovereign, supranational, and preferred and hybrid-structure deals.)

And investors were spoiled by choice, as today’s 14 issuers combined to offer 29 separate tranches, or the most ever for a single session. The secondary market provided an encouraging backdrop, as most of yesterday’s 19 new-issue tranches traded firmly through issuance today, trade data show.

Gilead Sciences today launched a $10 billion, six-part benchmark offering backing its $15 billion share-repurchase program, marking the 12th deal this year totaling $10 billion or more, all of which backed either share buybacks or M&A, LCD data show. Just three deals of $10 billion or more were placed in 2014.

Deals backing M&A and share buybacks remain an overarching theme for non-financial borrowers. Pentair Finance today launched $1.15 billion in three parts for its planned acquisition of privately held ERICO Global for roughly $1.8 billion.

However, two of the three Pentair tranches were inked at the midpoints of broad guidance ranges and in line with initial whispers, while the offering amount was ultimately less than the $1.25 billion that S&P had expected in rating the deal this morning. Today’s marketing progression came after Moody’s, as expected, cut the issuer’s senior unsecured rating by one notch due to energy-related weakness in operating trends and materially higher leverage resulting from the M&A play.

Benchmark offerings also came today from Nordea Bank ($2.25 billion), American Express Credit ($2 billion), Lowe’s ($1.75 billion), Tyco International Finance ($1.5 billion), Branch Banking & Trust ($1.25 billion), Marsh & McLennan ($600 million), Societe Generale ($750 million), and Marriott International ($600 million), alongside smaller deals for Kilroy Realty($400 million, upsized from $325 million), Southwestern Public Service ($200 million tap), and Piedmont Natural Gas ($150 million).

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