Heavy post-Labor Day high-grade deal supply eyed; corporate funds, ETFs post outflows

By Cristal Cody

Tupelo, Miss., Sept. 2 – The high-grade bond market posted a shut-out in the corporate space over the week, while a handful of deals from the sovereign, supranational and agency pipeline priced ahead of the long holiday weekend.

But, the quiet corporate deal pipeline is expected to change quickly in the short week ahead.

About $40 billion to $60 billion of investment-grade paper is expected to print in the post-Labor Day week, according to market sources.

The whole month of September is anticipated to stage a comeback in supply after volume quieted over the back half of August.

About $150 billion of corporate high-grade deals are projected to print in September, sources said.

August volume was strong in the first two weeks before quieting with the month ending with more than $110 billion of corporate issuance.

Funds, ETFs negative

Elsewhere, high-grade funds and ETFs this week posted the first outflow in five weeks, according to a BofA Securities, Inc. note.

Funds and ETFs saw a heavy outflow of $2.02 billion for the past week ended Wednesday, following a $2.22 billion inflow in the prior week.

Funds drove the outflows with a $2.32 billion outflow this week after posting a $630 million inflow a week ago.

ETF inflows slowed to $300 million over the week ended Wednesday from $1.59 billion of inflows in the previous week, BofA said.

Short-term high-grade inflows fell to $40 million from $1.38 billion last week.

High-grade corporate investment funds also saw heavy outflows of $4.64 billion for the past week ended Wednesday after an $806 million outflow a week earlier, according to Refinitiv Lipper US Fund Flows.

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