(Bloomberg) — U.S. investment-grade bond supply will slow next week ahead of the Thanksgiving holiday.
Syndicate desks are anticipating $10 billion to $15 billion of new bond sales, most of which are expected to come on Monday before the market gears down for the holiday.
This week, 39 borrowers blitzed the market with $56 billion of sales. Issuers had to pay higher new-issue concessions than average for the year and spreads didn’t compress as much as usual from initial price talk to final sale.
The spread on the Bloomberg U.S. Investment Grade Index widened to a three-month high at 91 basis points as of Thursday amid the supply onslaught and heightened inflation concern.
“Heavier-than-expected investment grade issuance weighed on performance this week,” Barclays Plc strategists led by Bradley Rogoff wrote in a report Friday. “While the upcoming Thanksgiving holiday should provide a respite from supply… ongoing inflation concerns and their potential implications for rates and central bank policy could represent a headwind for spreads.”
The slate of bond sales is likely to moderate substantially into the end of the year.
“Supply slows with Thanksgiving next week leading into December which is always lighter,” JPMorgan Chase & Co. strategists led by Eric Beinstein wrote Wednesday. Supply has declined 77% on average from November to December over the last four years, which means “it’s reasonable to expect December to be somewhat bullish for spreads,” the strategists wrote.
Investors continue to dump money into high-grade debt. Investment-grade bond funds saw a $1.42 billion cash influx in the week ended Nov. 17 after pulling in about $2.54 billion in the previous period, according to data from Refinitiv Lipper.
U.S. bond markets will be closed Thursday for Thanksgiving.
High Yield
Primary activity is set to quiet down, with no known deals in the high-yield bond pipeline. Junk bond yields have been climbing, hitting an eight-month high of 4.38% this week.
Despite yields coming under pressure, demand for newly issued junk bonds has been strong in November, with the $28 billion of bonds priced already passing dealer estimates of $20 billion to $25 billion for the month.
In U.S. leveraged loans, no known bank meetings for new deals are scheduled. As many as 10 deals have commitments due. Those include Flynn Restaurant Group’s $1 billion refinancing tranche and TV-network provider Dotdash Meredith Group’s SOFR-linked $1 billion acquisition loan.
Investors added $959 million of cash to U.S. leveraged-loan funds for the week ended Nov. 17, according to Refinitiv Lipper, the 17th consecutive week of inflows. Flows into junk bond funds moderated to $98.8 million after a big $2.6 billion inflow in the previous period.
In distressed credit, Exela Technologies has a bond exchange deadline Nov. 24.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.
The S&P/TSX composite index was up 0.05 of a point at 24,224.95.
In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.
The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.
The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.
The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.
This report by The Canadian Press was first published Oct. 10, 2024.
