US corporate bond issuers rush to market ahead of election

Fri Nov 2, 2012 10:16am EDT
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By Ciara Linnane

NEW YORK, Nov 2 (IFR) - The US corporate bond market came back with a bang this week after being shut down by the devastating storm Sandy in the US northeast.

Ten investment-grade and five high-yield deals hit the market on Friday, including a US$2.725bn offering from Clear Channel in an unusual burst of activity on the day that non farm payrolls data were announced. That followed ten investment-grade deals that priced on Thursday and ten high-yield deals that were in the market that day as it roared back to life, with issuers racing to get in before next week's presidential election.

A rallying equity market following the better-than-expected October jobs report provided a positive backdrop. Syndicate desks reported strong pent-up demand from investors, even as many market participants worked remotely or not at all, with transportation systems snarled and vast areas without power.

"Despite the market being shut for the past few days, investor response to the deals today has been very strong," said Andrew Karp, managing director and head of investment-grade syndicate for the Americas at Bank of America Merrill Lynch on Thursday.

"The breadth of participation is consistent with what we had seen prior to the storm."

That was evident in the solid book size achieved by most of the high-grade deals. BP Capital Markets' US$3bn three-part offering attracted a book size of almost US$10bn, while a US$2bn deal from Bank of Montreal garnered about US$7bn.

That encouraged the surge of issuers who emerged on Friday, including rare issuer Microsoft, telecoms giant Verizon and healthcare company Aetna, which announced a US$2 billion deal.

Five of Thursday's ten high-grade deals were from FIG issuers and all fared well after adopting an empathetic approach to the market.   Continued...