[THE ENDGAME] : Ex-SSAs Are Back...

… for now. While nowhere near what we saw last Monday ($38.45bln), high-grade issuers wasted no time getting this week off to a roaring start. For a change, ex-SSA issuance ($11.7bln) from 10 borrowers outpaced SSA issuers ($2.3bln) from thee borrowers, but that could all changed tomorrow, with six SSA offerings expected to come to market.

That doesn’t mean ex-SSA issuance is expected to slow since, on average, the Street is looking for $40bln to price this week. While some don’t see any more than $30bln pricing this week as December PPI (0.4% m-o-m, 3.5% y-o-y) tomorrow and December CPI (0.4% m-o-m, 2.9% y-o-y) on Wednesday could disrupt the flow, there are those who believe, with the “big six” banks reporting earnings later this week, that, with their help, we could see as much as $50bln cross the tape before the week is out.

As mentioned, numerous times, the group is notorious for issuing bonds immediately after reporting quarterly results. Over the past seven years the “big six” have contributed, on average, $20bln to January’s bottom line – last January, they combined to raise $28.75bln.

Be that as it may, despite, or maybe because of, rising Treasury yields, today’s haul brought ex-SSA issuance for the month to $90.55bln and there are still 13 viable trading sessions remaining. If you recall, on average, the Street is looking for $187.5bln in new supply to price this month. With the lowest estimate coming in at $175bln, while the highest estimate came in at $200bln.

It’s not only the “big six” banks that have the Street optimistic over issuance, but M&A-related issuance as well. After years of greater scrutiny of pending deals by the Biden administration’s DOJ and FTC, the M&A landscape is poised for a significant transformation. According to one survey, over 80% of CEOs and investors anticipate a resurgence in M&A activity in 2025, fueled by policy changes under the Trump administration.

And we saw our first M&A-related transaction of the year today. Plains All American Pipeline raised $1bln via a 10yr note offering with the proceeds going towards helping fund its $800m acquisition of Ironwood Midstream Energy. Speaking of M&A, you can add three more pending transactions to the pipeline.

Eli Lily has agreed to acquire an experimental cancer therapy unit from Scorpion Therapeutics for up to $2.5bln, while Johnson & Johnson is acquiring Inter-Cellular Therapeutics for a reported $14.6bln. It was also announced today that Glaxo-Smithkline will acquire IDRx for $1.15bln.

Also, on the M&A front, now that the Nippon Steel proposed purchase of US Steel is all but dead and buried, it was reported today that Cleveland Cliffs is partnering with Nucor in a potential bid for US Steel. According to reports, Cleveland-Cliffs would purchase all of US Steel for all cash and then sell off the Big River Steel subsidiary to Nucor.

As for market conditions today, the three major averages closed mixed with the Dow (+359) and the S&P500 (0.16%) snapping back from Friday’s losing session. However, the Nasdaq (-0.38%) failed to keep pace as higher interest rates took their toll on technology stocks.

As previously alluded to, Treasury yields edged higher again today, with the benchmark 10yr note yield jumped 2bp to 4.79%, its highest level in 14 months, while the long bond yield was only slightly higher, closing up 1bp to 4.97%. The 2yr note closed out the session unchanged at 4.40%.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

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

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