Earnings to trim volume, Q2 saw fewer deals than Q1; Anheuser-Busch, Primerica tighten

By Aleesia Forni and Andrea Heisinger

New York, July 13 - As data on consumer spending came out on Friday, issuers were absent from the high-grade market for the second straight day.

There have been some investment-grade-rated deals from emerging market names in the second half of the week, but otherwise nothing.

A report released Friday from Standard & Poor's ratings agency's global fixed income research said that corporate issuance globally had decreased in the second quarter as compared to Q1.

The past week saw solid volume with $31.375 billion of bonds priced in 36 deals, according to Prospect News data. That was more than the $20 billion projected at the top of the week.

"If you don't count that $7.5 billion [Anheuser-Busch deal] this week, it wasn't that busy," a syndicate source said late in the day.

The coming week is expected to see a drop in deals as earnings blackouts hit companies.

"We're thinking $5 billion to $10 billion," a market source said, adding that it should be another frontloaded week with most deals seen between Monday and Wednesday.

This week's issuances from Primerica Inc. and Anheuser-Busch InBev Worldwide Inc. continued to tighten in the secondary during a "pretty quiet" trading day, a source said.

S&P says Q2 issuance slower

A report from Standard & Poor's ratings service showed that corporate bond issuance slowed globally in Q2 compared to Q1.

The reason was increased investor anxiety about the sovereign crisis in parts of Europe, according to the report. This "put a damper on demand for new debt," analysts wrote. Other factors listed were the fragile U.S. economy, increased regulation that could stifle market growth and instability in other parts of the world like China and the Middle East.

Corporate issuance globally was at $543 billion in Q2, which was down from $896 billion in Q1, according to the report. The first half of 2012 saw $1.4 trillion of which investment-grade firms issued 61.4%. New corporate issuance was the second lowest total for the first half of a year for the last five years, according to the report.

Primerica active

A trader saw the recent issuance from Primerica trade around 290 bps bid on Friday, 12 bps tighter from Thursday's levels during a "pretty quiet" session, a market source said.

The Duluth, Ga.-based life insurance and financial products provider priced an upsized $375 million issue of 4.75% 10-year senior notes on Wednesday at a spread of Treasuries plus 325 basis points.

Anheuser-Busch tightens

The $3 billion of 2.5% 10-year notes from Anheuser-Busch traded at 94 bps bid, 93 bps offered, 1 bps tighter from Thursday's levels.

The tranche priced at a spread of 105 bps over Treasuries.

The bonds sold at a spread of Treasuries plus 120 bps.

The brewer is based in Leuven, Belgium.

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