March IG supply highest on record, excluding Covid-19 deals; April to bring lighter volume

By Cristal Cody

Tupelo, Miss., April 1 – March ended with a bang in the high-grade bond market as the top-highest supply month, excluding the pandemic volume of 2020.

“IG keeps pumping out new issues, while in high yield, it’s lopsided,” a market source said.

High-grade-rated companies sold about $232 billion of new bonds in March, making it the highest volume month on record, excluding the massive supply priced in the Covid-19 environment of 2020, sources reported.

Deal volume finished the final week of the month strong with about $35 billion of new investment-grade paper sold.

Steady action is forecast for the week ahead with syndicate sources expecting about $25 billion to $30 billion of new issuance.

Lighter April supply is anticipated with about $100 billion of volume forecast after some deals were pulled forward to get ahead of the Federal Reserve’s interest rate hike in March, sources reported.

The deal pipeline in April also typically thins with companies in first quarter earnings-related backouts.

A $20 billion offering from Oracle Corp. remains on the radar in April as the company moves toward closing a $28.3 billion acquisition of Cerner Corp. in 2022, according to market sources.

High-grade posts outflow

Meanwhile, the high-grade space saw heavy outflows over the week.

U.S. investment-grade funds and ETFs posted a $2.61 billion outflow for the past week ended Wednesday, down from inflows of $1.06 billion in the prior week, according to a BofA Securities, Inc. research note.

Heavy outflows from high-grade funds that rose to $4.33 billion from $1.68 billion a week earlier were partially offset by inflows to ETFs of $1.71 billion, down from $2.74 billion of inflows in the prior week.

Municipals were the other space to see outflows over the week, while flows were positive in high yield and equities, according to the note.

“There was a cash inflow this week after weeks of massive outflows,” a source said of junk funds.

© 2015 Prospect News.
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