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US IG Wrap — Market gobbles up record supply, prepares for an active December
William Hoffman
•4 min read
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Only three borrowers trotted into the market on a Thanksgiving-shortened week that marked a breather from a historic run of issuance.
Pharmaceutical company Roche was the largest of the deals, pricing a $1.9bn three-part deal to fund its $3.5bn acquisition of 89bio.
The acquisition gave Roche another foothold in the booming weight loss category, which was the source of several bond deals in recent weeks.
Biotech firm 89bio’s leading late-stage drug is in a class known as FGF21, which treats fatty liver and is being heavily studied as the next wave of weight loss drugs. Earlier this year Roche also spent $5.3bn to acquire the rights to another FGF21 obesity therapy by Denmark's Zealand Pharma, all in an effort to keep up with the likes of Eli Lillyand Novo Nordisk’s leading GLP-1 drugs.
Elsewhere, Duke Energy returned with its eighth deal of the year and fourth since the start of September. The $1.1bn two-part deal brought its total borrowings this year up to $7.26bn as the company continued to invest in new projects to meet the growing energy demands of AI.
UK insurance company Rothesay Life was the only issuer to come to the US bond market Tuesday (25 November) with a $500m perpetual non-call 10-year note that priced at 7%. No deals were announced Wednesday as the market packed it in for Thanksgiving and a half-day on Black Friday.
The deals this week seemed downright quaint compared to the jumbo issuances in October. Despite some spread widening amid the deluge, banks say they don’t think supply is done for the year. The street is calling for some $24bn of supply next week for around $34bn of volume on the month, which is right around the average for the past five years, according to a note from R. Seelaus.
“Deals still very much get done, but this slight cautiousness has crept in close to year end, which can quickly lead to issuers saying we should just start issuing again in January,” one banker said. “But when the market is strong like it is now, issuance will continue well into December.”
