Volatile market conditions crimp high-grade bond supply; two issuers postpone deals

By Cristal Cody

Tupelo, Miss., April 29 – Investment-grade bond issuers faced rough waters over the final week of April with market volatility forcing at least two issuers to stand down and total bond supply failing to break $10 billion.

Only $8.6 billion of reported corporate high-grade issues were brought to the market as a flurry of earnings releases flooded inboxes and conditions grew volatile ahead of the Federal Reserve’s monetary policy meeting next week.

Market participants are anticipating a rate hike of 50 basis points at the Federal Open Market Committee’s May meeting.

About $25 billion to $30 billion of high-grade bond issuance was anticipated for the week.

The week’s tone was set early with the primary market posting a shut-out on Monday in a session otherwise focused on the announcement that Elon Musk’s $44 billion bid for Twitter was accepted.

Other issuers chose to stand down on Tuesday and Wednesday.

Reliance Standard Life Global Funding II (A2/A+) postponed a $300 million offering of five-year funding agreement-backed notes on Tuesday due to volatile market conditions, according to a market source.

Initial talk on the Rule 144A and Regulation S deal was in the 140 bps over Treasuries area.

Then on Wednesday, emerging markets issuer Central American Bank for Economic Integration, or Cabei (Aa3/AA), postponed its dollar-denominated Rule 144A and Regulation S offering of five-year social bonds due to market conditions, a source said.

The notes were initially talked to print at the SOFR mid-swaps plus 90 bps area.

Investment-grade spreads widened nearly 10 bps over the week, a market source said.

Issuers price tight

Most of the high-grade deals that did print came better than talk, sources reported.

Tuesday’s session saw Anthem Inc. price $1.3 billion of 10- and 30-year notes (Baa2/A) 20 bps tighter than talk.

Cintas Corp. No. 2 also sold $1.2 billion of three- and 10-year notes (A3/A-) on Tuesday 20 bps better than talk.

SVB Financial Group’s $800 million two-part senior fixed-to-floating rate deal (A3/BBB) during the session came on top of talk.

The only issuers on Wednesday, Goodman US Finance Five LLC and National Rural Utilities Cooperative Finance Corp., both priced 15 bps better than talk.

American Express Co.’s $3.5 billion three-part offering of notes (A2/BBB+/A) on Thursday was the week’s biggest deal and included a seven-year tranche of sustainability notes. The notes priced 15 bps to over 20 bps tighter than talk.

Waste Management Inc.’s $1 billion sale of 10-year notes (Baa1/A-/BBB+) on Thursday came 25 bps tighter than talk.

April saw over $100 billion of high-grade deal volume with issuance forecast to stay fairly light in May in the $125 billion range, sources report.

About $25 billion of new bond issuance is expected in the first week of May, though supply may be front-loaded ahead of the Fed’s rate decision on Wednesday, sources said.

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