[MORNING CALL:] A Parade of Prospects

Aside from Alibaba announcing that it will hold investor calls today which may result in a dual-currency 7-pt offering, joining Vulcan Materials, who wrapped up investor calls on Friday, in the pipeline, there were no ex-SSA deals announced overnight, despite the fact that high-grade issuance is expected to amount to roughly $30bln, on average. The estimates ranged from a low of $20bln, to a high of $40bln.

However, we have been told to expect at least a half-a-dozen borrowers to contemplate tapping the primary market today, one of which is a 31nc30 fixed-to-floating rate note offering from Morgan Stanley. It will be the bank’s eighth trip to the market this year, having already raised $32.25bln. It will also be the third offering from a “big six” bank in the last week - Citibank/Citigroup ($4.25bln) and Goldman Sachs ($3bln). Keep in mind, there is also Apple lurking in the shadows after filing a debt securities shelf with the proceeds earmarked for general corporate purposes including stock buybacks, dividends, capex, acquisitions and repayment of debt.

The Street widely expects the barrage of issuance to continue as the window of opportunity for issuance this year begins to close. Theoretically, there are only four more weeks - one being Thanksgiving week - of issuance remaining in 2024. Historically, issuance shuts down around the seventeenth of December.

Whereas would be borrowers took a back seat to the broader markets the week of the election – 3 deals/3 tranches/$1.9bln), they were front and center last week – 26 deals/52 tranches/$46.34bln. That was enough to (1) top all weekly estimates, including the highest one of $40bln and (2) rank last week as the tenth busiest ex-SSA issuance week of the year – a four-day week no less. High grade corporate borrowers made up for lost time last Tuesday, when 13 issuers flooded the market with $30.15bln in supply. That made last Tuesday (1) the third busiest ex-SSA issuance day of the year and (2) the most high-grade issuance we have seen in one session since the day after Labor Day.

That also brought issuance for the month to $48.25bln as we reached the midpoint of November. If you recall, coming into this month, the Street thought, on average, we could see $70bln in new supply, with the educated guesses ranging from a low of $50bln, to a high of $90bln. Historically, the month of November ranks as the sixth most prolific issuance month of the year, with an average output of $101.1bln over the last decade. We have seen as much as $118.229bln (2017), and as little as $74.41bln (2019) come to market in the penultimate month of the year.

As for general market conditions, futures indicate a mixed open for the three major indices, with the Dow lower, the S&P500m virtually unchanged, and the Nasdaq higher. This, after a tough week for the three major indices, with the Dow closing 1.2% lower on the week. The S&P500 slipped 2.1%, while the tech-heavy Nasdaq fell 3.2%. The Treasury market took a hit over the weekend as traders mull over the fate of interest rates and the ramifications of President-elect Trump’s anticipated fiscal policies on inflation and the economy in general. This after Fed Chair Powell suggested last week that the Fed may be less aggressive when it comes to its rate-cutting agenda.

The benchmark 10yr note, which closed at 4.43% on Friday, higher by 13bp on the week, is trading higher again this morning (4.47%), its highest level since early June. Meanwhile, the long bond, which closed out last week at 4.60%, is trading 6bp higher at 4.46% this morning, though the 2yr note yield is unchanged from Friday’s close at 4.31%. Corporate spreads were also unchanged with the average high-grade bond trading 80bp over comparable Treasuries.

.

2024 HIGH GRADE ISSUANCE - 11/18 WEEK, NOVEMBER & 2024 ESTIMATES

.

2024 HIGH GRADE ISSUANCE - RECENT MANDATES

.

.

2024 HIGH GRADE ISSUANCE - 11/18 CALENDAR

.

---- Subscribe to read more ----

To receive this analysis plus much more, subscribe to IGM. Request your free trial of the service today.