Market volatility puts brakes on issuance; Anheuser-Busch InBev widens; credit spreads ease

By Aleesia Forni

New York, Jan. 15 – The investment-grade bond market saw a risk-off tone to close another volatile week on Friday.

No new deals entered the primary market as stocks sold off on declines in crude oil prices and another slump in Chinese stocks.

The turbulent session ends a week that saw more than $66 billion of new issuance, due largely to Anheuser-Busch InBev Finance Inc.’s behemoth $46 billion acquisition bond deal.

Sources are predicting a more subdued primary in the week ahead as the market continues to digest the onslaught of supply priced so far this year.

Between $20 billion and $25 billion is expected to price following the Martin Luther King Jr. holiday weekend.

In the secondary market, tranches of Anheuser-Busch’s recent issue were trading mostly wider on Friday.

The Markit CDX North American Investment Grade 25 index eased 3 basis points on Friday to a spread of 109 bps.

Funds see outflows

Lipper US Fund Flows reported an outflow of $740 million from corporate investment-grade bond funds for the week ended Jan. 13.

This follows the previous week’s $1.12 billion of outflows, bringing the year-to-date total to $1.86 billion of outflows.

Anheuser-Busch weakens

Tranches of Anheuser-Busch’s $46 billion bond offering, which priced during Wednesday’s session, were trading mostly wider to close the week.

The $4 billion of 1.9% three-year notes were around 4 bps wider at 89 bps bid. The tranche sold at Treasuries plus 85 bps

Its $7.5 billion tranche of 2.65% five-year notes, which sold at Treasuries plus 120 bps, was quoted at 123 bps bid, 120 bps offered.

Also, the $6 billion tranche of 3.3% seven-year notes was quoted 2 bps wider at 151 bps bid, 148 bps offered after pricing at Treasuries plus 150 bps.

The company’s $11 billion of 3.65% 10-year bonds traded 3 bps wider at 164 bps bid. The notes sold at 160 bps over Treasuries.

And its $6 billion of 4.7% 20-year bonds traded 3 bps wider at 192 bps bid. Pricing was at Treasuries plus 190 bps.

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