[MORNING CALL] Still Enough

Aside from the fact that we had one of yesterday’s deals scrapped, it’s been a heck of a week in the high-grade primary market, relatively speaking. After US prosecutors charged the company's founder, Gautam Adani, with participating in an alleged bribe plot, the company decided to scrap it’s $600m 20yr “green” bond issue in view of recent press releases from DOJ and SEC relating to the promoter of the parent entity.

Still, while this week will most likely not see enough ex-SSA issuance to make it onto the top ten list of busiest weeks of 2024 – there were no new deals announced overnight, though we do expect a handful of potential borrows to add to this week’s total. Including a proposed 10yr offering from Expand Energy - it’s not without its own milestones. After eight more issuers, in an effort to get ahead of what is expected to be an inactive issuance week next week (Thanksgiving) raised $13.4bln bringing issuance for the week to $32.55bln.

That was enough to eclipse the average weekly estimate of $30bln for the thirty-fifth time this year. It also brought ex-SSA issuance for the month of November to $80.8bln, again enough to top the monthly average estimate of $70bln. Actual monthly issuance has topped the average estimate every month this year.

Lastly, it was also enough to officially crown 2024 as the second most prolific ex-SSA high-grade issuance ($1.464.308bln) year on record, topping 2021’s $1.461.891bln and trailing only 2020’s $1.795.825bln, when everyone and their mother was raising capital to shore up their balance sheets during the pandemic. Coming into this year, the Street was under the impression that ex-SSA borrowers would raise $1.375trln in new debt, an increase of 13.7%, while 2024’s issuance is outpacing last year by 25.5%.

Yesterday’s haul was led by a rather chunky debut issue from mobile technology company Applovin who raised $3.55bln via a 4-pt offering that drew $19.5bln (5.5x covered) in investor interest. However, investors didn't seem all that enthralled with the day's offerings. While yesterday's deals contracted an average of 27.7bp from IPT/PX, they only built a combined book of $37.5bln (2.8x covered), while pricing at an average NIC of 3.9bp. Though, in all fairness, some final metrics were not available, which may have distorted the numbers somewhat.

As for general market conditions, futures are edging higher this morning as the market parses the earnings results from AI darling Nvidia. After the bell last night, the company reported better-than-expected Q3 results and issued strong guidance. The stock initially fell around 3% as the chipmaker’s revenue growth slowed from previous quarters, though it is staging a bit of a rebound this morning.

The Dow appears headed for a better than 100-point gain, while the S&P500 (0.20%) and the Nasdaq (0.07%) are headed in the same direction. This after the three major averages closed mixed on the day with the Dow the only index in the green (+140 points), while the S&P500 (0.0%) closed unchanged, and the Nasdaq closed lower by 0.11%.

Over in the Treasury market, it appears yields are having trouble recapturing the few basis points they gave up yesterday. The benchmark 10yr note is trading at 4.40%, lower by 1bp, while the long bond yield is unchanged at 4.59%, and the 2yr note is also unchanged at 4.31%. Corporate spreads widened a tad overnight, to where the average high grade bond is now trading at 81bp over comparable Treasuries.

.

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

.

2024 HIGH GRADE ISSUANCE - RECENT MANDATES

.

.

2024 HIGH GRADE ISSUANCE - 11/21 CALENDAR

.

.

2024 HIGH GRADE ISSUANCE - 11/20 PRICINGS

.

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

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