By Matt Tracy<\/p>\n
WASHINGTON (Reuters) -Investment-grade corporate borrowers tapped U.S. debt markets for nearly $70 billion so far this week, beating forecasts for the Labor Day-shortened first week of September as borrowing costs remain near record lows.<\/p>\n
At least 54 borrowers sold more than $67 billion worth of paper this week as of Friday’s market open, according to market participants. This well outpaced forecasts heading into the week of roughly $60 billion.<\/p>\n
Tuesday by far added the most to the week’s primary market tally, with 28 issuers selling $43.3 billion in bonds in what is historically the busiest day of the year for high-grade bond market deal-making.<\/p>\n
The Tuesday deal frenzy ranked among the busiest post-Labor Day market opens ever for the high-grade primary market, according to Blair Shwedo, head of investment-grade sales and trading at U.S. Bank in Charlotte, North Carolina.<\/p>\n
It was an expected busy day for the calendar, he noted, but surprising in the high number of smaller-sized deals compared to previous such days in recent years.<\/p>\n
“The past few (post-Labor Day holiday) days that have been that large had mega-deals,” Shwedo said. “So the diversity there this Tuesday was pretty impressive.”<\/p>\n
The largest deal to start the week was U.S. pharmaceutical company Merck’s $6 billion six-part senior note offering, which will help fund its $10 billion buyout of peer Verona Pharma announced on July 9.<\/p>\n
The second-biggest bond sale was health insurer Cigna’s $4 billion deal to refinance its soon-maturing term loan and for general corporate purposes.<\/p>\n
Spreads on high-grade deals this week, or the premium over U.S. Treasuries paid by U.S. companies for debt, remained near all-time tight levels that have persisted in recent weeks. They last averaged 79 basis points (bps), according to the ICE BofA Corporate Index, having risen from a record-tight 75 bp level hit on August 15.<\/p>\n
“From our perspective, deals have been coming pretty tight compared to existing paper,” said Mike Sanders, head of fixed income at Madison, Wisconsin-based asset manager Madison Investments.<\/p>\n
Current cheap borrowing costs could cheapen further if the Federal Reserve begins rate cuts at the September 16-17 meeting of the Federal Open Markets Committee.<\/p>\n
The U.S. rate futures market has priced in an 88% chance of a 25-bp rate cut by the Fed this month. It has also priced in a 12% chance of a bigger 50-bp cut following data from the Bureau of Labor Statistics showing U.S. nonfarm payrolls rose by an underwhelming 22,000 jobs last month.<\/p>\n
“A Fed easing cycle is generally beneficial for corporations and could also help boost economic growth,” said Natalie Trevithick, head of investment-grade credit at Los Angeles-based asset manager Payden & Rygel, in a written note.<\/p>\n
“Such an environment could enable spreads on corporate bonds to remain at their currently tight levels for some time to come or possibly even tighten further.”<\/p>\n
(Reporting by Matt Tracy in Washington, D.C.; Editing by Alden Bentley and Andrea Ricci)<\/p>\n","protected":false},"excerpt":{"rendered":"By Matt Tracy WASHINGTON (Reuters) -Investment-grade corporate borrowers tapped U.S. debt markets for nearly $70 billion so far…\n","protected":false},"author":2,"featured_media":45865,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[175],"tags":[79,34336,18,34337,19,17,34334,188,34335],"class_list":{"0":"post-45864","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-markets","8":"tag-business","9":"tag-corporate-bonds","10":"tag-eire","11":"tag-futures-market","12":"tag-ie","13":"tag-ireland","14":"tag-market-participants","15":"tag-markets","16":"tag-primary-market"},"share_on_mastodon":{"url":"","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/45864","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/comments?post=45864"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/45864\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media\/45865"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media?parent=45864"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/categories?post=45864"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/tags?post=45864"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}