IG bond supply soars; Oracle, GE anchor volume; Credit Suisse prints, CDS spreads ease

By Cristal Cody

Tupelo, Miss., Nov. 10 – High-grade bond supply soared over the short week to post more than $45 billion of bonds priced in deals anchored by mergers-and-acquisitions- and spinoff-related issuance.

Oracle Corp. shook the investment-grade market awake on Monday with its long-awaited bond offering since closing in June on its $28.3 billion acquisition of Cerner Corp.

The company sold $7 billion of notes (Baa2/BBB) in four tranches that priced tighter than talk by 35 basis points to as much as 55 bps on the 30-year tranche, a source said.

Then, to cap the short week off, GE Healthcare Holding LLC priced $8.25 billion of senior notes (Baa2//BBB) in six tranches on Wednesday ahead of October inflation data due out Thursday.

That deal came quickly after GE wrapped a two-day round of investor calls that started Tuesday to prepare financing for the spinoff of GE HealthCare from General Electric Co., a source said.

GE priced the notes 25 bps to 35 bps better than talk.

The week’s volume blew past syndicate expectations with desks looking for about $25 billion to $30 billion of supply ahead of Friday’s market close for the Veterans Day holiday.

“Despite the big 12 bps move tighter in IG credit since the peak in early October, IG bond spreads remain wide to other major macro markets including high yield, CDS, equity volatility and interest rate volatility,” according to a BofA Securities Inc. research note this week. “Not surprisingly this generates demand for IG credit, and the primary market offers the best way to buy. As a result, we saw a big jump in IG issuance this week combined with strong new issue performance.”

Investment-grade issuers were few and far between at the start of November. Deal volume month to date totals about $50 billion, while overall November volume is expected to total in the $75 billion to $85 billion area, sources said.

Credit Suisse prices tight

In other supply this week, Credit Suisse Group AG came by the primary market on Wednesday with a $2 billion offering of 9.016% notes due 2033 (Baa2/BBB) that priced at a spread of 485 bps over Treasuries, tighter than talk in the 512.5 bps spread area, a source said.

Credit Suisse brought the notes to the market as the issuer saw its credit default swap spreads widen 70 bps for the past week ended Wednesday, a source said.

Credit Suisse’s planned restructuring to scale back its investment bank and reallocate capital to its global wealth-management business will involve substantial execution risk, Fitch Ratings said in an Oct. 28 report.

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