U.S. Bond Sales to Come Roaring Back After Labor Day

U.S. CREDIT WEEK AHEAD: Bond Sales to Slow Amid Volatility - Bloomberg

The investment-grade primary market will spring back to life next week following the U.S. Labor Day holiday, as borrowers look to issue debt with low coupons.

Syndicate desks expect $40 billion to $45 billion of fresh high-grade supply in the four days of trading, after just $3.75 billion priced this week with much of Wall Street on vacation.

Companies will continue the aggressive borrowing seen through most of 2021, helped by the low-rate environment and driven by the necessity of funding a growing pipeline of M&A activity. For the month, $130 billion to $140 billion of supply is expected, according to an informal survey of debt underwriters.

“With rates now going up we think issuers will see September as the last window to issue at these low coupons, which creates an incentive to continue to pull forward needs,” Hans Mikkelsen, Bank of America Corp.’s head of high-grade credit strategy, wrote in a report Thursday.

Expect a busy high-yield bond and leveraged loan calendar through the fall as acquisition and buyout financing, along with refinancings, make their way through the market, said John McAuley, co-head of debt capital markets for North America at Citigroup Inc