Corporate-Bond Market Absorbs Nine Deals Tuesday
January 10 2012 - 12:01PM
Dow Jones News
Corporate issuance in 2012 continues at a robust pace, with nine
investment-grade borrowers selling debt in Tuesday's market.
Eight of the deals add up to $3.925 billion; the size of the
ninth, a four-part deal from SABMiller PLC (SAB.JO, SBMRY), has yet
to be determined, but one syndicate manager away from the deal
estimated its size at around $4 billion.
"Companies continue to term out their maturity profiles or, in
some cases, to prefund their acquisitions," said Scott Kimball,
portfolio manager at Miami-based Taplin, Canida & Habacht LLC,
which sub-advises the BMO/TCH corporate income fund.
Kimball said deals are coming with only moderate
concessions--the extra yield demanded by investors in the primary
market--indicating that appetite for credit is holding up fairly
well so far this year.
"But the market is not agnostic to credit risk," he said. "The
market is looking at specific issuers and making the riskier ones
offer a decent concession."
The diversity on Tuesday's docket includes energy, utility,
retail and beverage companies.
Larger deals include a $900 million offering from John Sevier
Combined Cycle Generation LLC, which is run by the Tennessee Valley
Authority, and an $800 million offering from Macy's Inc. (M), which
is selling 10- and 30-year bonds.
Enbridge Inc. (ENB), a Canadian energy-transport company, is
also marketing $550 million of 10-year bonds.
A key gauge of the corporate bond market, Markit's CDX North
America Investment-Grade Index, had improved 1.9% as of
mid-morning, while a similar index tracking the high-yield market
was up 0.4%.
Smaller deals include a $300 million, 10-year offering from
Valspar Corp. (VAL), a $250 million 30-year bond deal from Alabama
Power, a $300 million offering of five-year notes from Entergy
Corp. (ETR) and a $325 million 30-year deal from Arizona Public
Service.
BBVA Banco Continental SA is also marketing its $500 million
offering of five-year notes. The deal was supposed to be priced
Monday but was reportedly held back by a document delay.
The wide range of deals follows a busy Monday in which seven
companies floated $8.85 billion of debt, according to Dealogic. The
first week of the new year saw $22.6 billion of deals in just four
days.
A syndicate manager Tuesday his $20 billion volume estimate
remains unchanged despite the active start to the week, in part
because he expects issuers to front-load their deals early in the
week before the market slows down a bit ahead of the Martin Luther
King Jr. long weekend.
-By Patrick McGee, Dow Jones Newswires; 212-416-2382;
patrick.mcgee@dowjones.com
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