Strong September high-grade bond issuance eyed; new paper mixed; Meta, Apple soften

By Cristal Cody

Tupelo, Miss., Aug. 26 – The slower deal pace in the high-grade bond market is expected to continue through the Labor Day weekend with only $1.3 billion of corporate issuance seen this week.

Primary activity has thinned over the back half of August with many out of the office for late-summer vacations.

More than $110 billion of notes already priced this month.

September deal action is anticipated to kick up a notch post-holiday with about $150 billion of supply anticipated by market participants.

Overall secondary trading activity also has been light across high-grade and junk bonds during the week, sources reported.

New blockbuster issues priced in August have been mixed in the secondary market.

Meta Platforms Inc.’s $10 billion Regulation S and Rule 144A offering of senior notes (A1/AA-) sold in four tranches were trading with handles mostly in the low to mid 90s on Friday, a source said.

The company’s $3 billion tranche of 3.85% notes due 2032 traded better than par after pricing Aug. 4 at 99.98 to yield 3.85% but dropped more than 1 point the next day and drifted lower over the month.

The bonds were seen Friday afternoon at the 95.5 to 95.75 area and yielding more than 4.3%.

Apple Inc.’s $5.5 billion of notes (Aaa/AA+) that priced in four tranches in a Securities and Exchange Commission-registered offering at the beginning of the month also were trading in the 94 to 96 context on Friday, a market source said.

Apple’s 3.35% notes due 2032, priced in a $1.5 billion tranche at 99.882 to yield 3.364%, or a spread of Treasuries plus 78 basis points, were quoted at 96.25 and a yield of 3.8%.

High-grade inflows slow

Meanwhile, high-grade corporate investment funds posted outflows of $806 million for the past week ended Wednesday, according to Refinitiv Lipper US Fund Flows.

The junk space saw heavier outflows totaling $4.57 billion for the week.

Inflows to high-grade funds and ETFs slowed during the week to $2.22 billion from $2.97 billion in the previous week and $4.47 billion the week prior, according to a BofA Securities, Inc. note.

ETF inflows drove the decline and were down to $1.59 billion for the week ended Wednesday from $2.77 billion the previous week.

Inflows to retail-driven funds improved to $660 million from $190 million a week ago, BofA said.

Short-term high-grade flows also rose to $1.38 billion from an outflow of $1.1 billion in the previous week.

Excluding short-term flows, inflows softened to $840 million from $4.07 billion a week earlier.

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