It’s official, this was a record week for the high-grade primary market in the US.
Hot on the heels of more than $50 billion in issuance over Tuesday and Wednesday, another $20.3 billion priced Thursday across 15 deals, bringing the totals for the week to $74.5 billion across 50 deals. Those are both records.
“The prior record for investment-grade bond issuance was $66 billion in the week of September 9, 2013 when Verizon sold $49 billion of bonds in eight parts, the biggest company debt offering ever”, Bloomberg notes, on the way to reiterating something we pointed out on Wednesday evening – namely that a lot of this is aimed at refinancing.
It’s also well worth noting that during Q4 of 2018, the media and various commentators were shouting from the rooftops about an imminent bursting of the corporate credit bubble. There was talk of a “BBB apocalypse” and “fallen angel risk” was on everyone’s lips.
Fast forward to Q3 2019 and yields are near record lows. Returns have been impressive, to say the least. After the worst year since the crisis, the market is up some 14% in 2019.
Treasury yields surged on Thursday, perhaps suggesting anyone who wants to tap the market should do it now, especially if you think things might get “interesting” again in Q4 when trade tensions are bound to flare anew.
“While refinancing trades took a breather after two very busy sessions, coming in at $7.5 billion today, a number of banks took the baton and issued $9.5 billion for general corporate purposes”, BofA’s Hans Mikkelsen wrote Thursday evening.
He also provided some useful color and perspective on the record-setting week. “This week’s new record issuance volume accounts for about 1.0% of the size of the US IG index, while the previous record during the week of September 9th, 2013 accounted for a much higher 1.5% share of the index back then [so] this week’s issuance is comparatively lighter and more easily digestible into a much larger market”, he remarked.
As Bloomberg went on to write in the same linked post above, “investment-grade issuance is now down just about 2% from the same point last year [while] in June, the gap was closer to 13%”.
Here’s a full list of everything that’s priced in the post-Labor Day surge.