Morning Commentary: CIBC plans to tap market; high-grade inflows up; secondary trading thins

By Cristal Cody

Tupelo, Miss., Jan. 26 – Friday deal action is likely in the high-grade market with a senior note offering on deck from Canadian Imperial Bank of Commerce.

The Toronto-based financial institution is marketing a U.S. dollar-denominated floating-rate issue.

Supply has been light over the week with less than $8 billion of corporate issuance and $8 billion of SSA bond volume through early Friday.

Elsewhere, investment-grade inflows climbed on the week.

“Inflows to U.S.-domiciled fixed income funds and ETFs accelerated to $5.71 [billion] during the week ended January 24th, 2018 from $1.9 [billion] the week before, driven by a significant improvement in high grade,” Yunyi Zhang, an analyst with BofA Merrill Lynch, said in a research note, citing fund flow data from BofA Merrill Lynch and EPFR Global Co.

U.S. high-grade funds and ETF inflows rebounded to $4.46 billion, the strongest week since the week ended Nov. 1, 2017, from $2 billion in the previous week, according to the note.

“The improvement was across the board,” Zhang said. “Inflows more than double for not only HG funds to $3.45 [billion] from $1.51 [billion], but also HG ETFs to $1.01 [billion] from $0.49 [billion] a week earlier. Short-term HG inflows jumped to $1.07 [billion] from $0.01 [billion], and outside-of-short-term HG inflows also accelerated to $3.4 [billion] from $2 [billion] the prior week.”

CIBC stable

In other activity, the secondary market has been active over the week, though trading declined during Thursday’s session with $19.67 billion of investment-grade bonds traded, according to Trace data.

Trading volume hit $23.09 billion on Wednesday, compared to $20.56 billion on Tuesday and $17.87 billion on Monday.

CIBC’s 1.6% senior notes due Sept. 6, 2019 (A1/A+/AA-) traded over the morning mostly unchanged at 98.76, a source said.

The bank sold $1 billion of the notes at 99.982 to yield 1.606%, or 70 basis points over Treasuries, on Aug. 29, 2016.

CIBC’s most recent dollar-denominated issuance of 2.35% covered bonds due July 27, 2022 have not been been active in the secondary market since issuance, according to a source. The bonds were last seen trading in the first week of January at 98.67.

The bank sold $1.75 billion of the bonds on July 20 at a spread of Treasuries plus 55.15 bps.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.