[MORNING CALL:] See You in September?

We just may have seen the last ex–SSA issuance for the month of August, as no deals were priced yesterday making it the fifteenth ex-SSA “zero” issuance day of the year – there were 32 last year. As a matter of fact, we may not see another deal of any kind over these last two days of the month, as people start to head for the hills, or the beach, or wherever, to beat the long Labor Day weekend traffic. That left ex-SSA issuance for the month at $106.995bln, $3bln shy of the highest monthly estimate of $110bln, though this August marks only the fourth time in history that ex-SSA issuance has surpassed the century mark and ranks this month as the fifth busiest ex-SSA issuance month of the year.

But, while there may not have been any action in the ex-SSA market, the same could not be said for SSAs, with four deals - Province of Quebec ($2bln 10yr global notes), Export Development Canada ($1.75bln 3yr notes), Oesterreichische Kontrollbank AG ($1bln 5yr global notes) and The Republic of the Philippines ($2.5bln 3-pt deal) – combining to raise $7.25bln. That brought overall (SSA-inclusive) issuance to $135.145bln for the month, far and away more than the Street was expecting – the average estimate came in at $100bln, while the highest estimate was calling for $115bln. It also brought overall issuance for the year to $1.410.258bln, roughly $10bln shy of the average annual overall estimate of $1.420.000bln.

Now, over the past 10 years, September has averaged $166bln in overall issuance, so it’s a almost a forgone conclusion that we will surpass that in the next week or two. Furthermore, we only need $139.7bln between now and the end of the year to reach the highest yearly overall estimate of $1.550.000bln, so that too should fall by the wayside, maybe as soon as the end of next month. That would make this year the fifth busiest overall issuance year on record, not adjusted for inflation.

September is known as one of the busiest issuance months of the year, ranking #2 behind January. But there is a possibility that we may not see as much as that ($139.7bln) price next month, if one is to believe those who subscribe to the theory that market conditions prompted issuers to accelerate their plans to tap the market this month to avoid the post-Labor Day rush we see every year. Some were also under the impression that the volatility that is bound to occur in the run up to the Fed’s interest rate decision next month and the upcoming presidential election, might have also compelled borrowers to come forward sooner rather than later. In any case, the least issuance we have ever seen in September over the last 10 years was $89.4bln (2015), while we have seen as much as $167.52bln (2020) come to market during the month.

The month of August saw six M&A-related deals come to market this month, raising $19.435bln, or 18.2% of the month’s total volume, which has led some to believe that companies appeared to accelerate their deals to finance such transactions before the run up to the presidential election in November. However, there are still dozens of transactions out there that need to be financed. Last year there were 32 M&A-related transactions priced which raised $128.4bln, or 10.62% of the year’s final tally, fourteen of those deals priced during the second half of the year, raising $40.2bln in the process, something that could be repeated this year considering the size of the pipeline. While some have argued that the upcoming election could put many M&A deals on hold, in 2020, the last time we elected a president, 25 M&A-related deals were priced between July and December, totaling $82bln.

Be that as it may, the broader markets appear to be shaking off a less than stellar earnings report from Nvidia and trying to mount a rebound from yesterday’s Nvidia-driven selloff. Futures are pointing to a better than 200-point rally at the open, while the S&P500 and the Nasdaq appear headed for modest gains at best. This after the Nasdaq closed the session 199 points lower (-1.12%), Nvidia (-2.87%) dragging the index lower as investors anxiously awaited market darling, Nvidia’s quarterly earnings results. The Dow closed lower by 159 points yesterday, falling from its all-time high close of the previous session, while the S&P500 fell 0.6%, also dragged down by weakness in the tech sector.

While the company exceeded expectations on the top and bottom lines, and issued an optimistic current-quarter sales outlook, though the results were not up to the Street’s expectations. Almost lost in the shuffle, Salesforce and CrowdStrike’s quarterly results beat the Street on both the top and bottom lines, though CrowdStrike lowered its full-year guidance.

While corporate spreads were unchanged, with the average high-grade bond still trading 96bp over comparable Treasuries, the Treasury market itself was virtually unchanged overnight. Ther benchmark 10yr note, which closed 1bp higher yesterday at 3.84%, has gained back that basis point this morning, while the long bond is trading 1bp lower this morning at 4.12%, and the 2yr note gave up 2bp overnight, trading at 3.85%.

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2024 HIGH GRADE ISSUANCE - 2024 VS 2023 COMPARISON

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2024 HIGH GRADE ISSUANCE - 08/26 WEEK, AUGUST & 2024 ESTIMATES

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2024 HIGH GRADE ISSUANCE - 08/28 PRICINGS

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