High-grade bond issuance ramps up; UnitedHealth’s $9 billion deal among year’s largest

By Cristal Cody

Tupelo, Miss., Oct. 28 – High-grade bond issuance over the week jumped to more than $35 billion, led by multiple-tranche deals from UnitedHealth Group Inc., HSBC Holdings plc and Barclays plc.

UnitedHealth sold $9 billion of notes (A3/A+/A) in seven tranches to blockbuster demand of more than $32 billion, a source said.

The transaction so far is the year’s sixth-largest deal with the primary market last seeing a major bond transaction in August when Meta Platforms Inc. sold $10 billion of notes (A1/AA-) in four tranches.

The year’s largest deal still stands as Magallanes Inc.’s $30 billion of senior notes (Baa3/BBB-/BBB-) priced in 11 tranches in March 2022 as part of the combination of Discovery, Inc. and the WarnerMedia segment of AT&T, Inc., according to market sources.

UnitedHealth’s paper priced about 15 basis points tighter than initial talk on the short end and as much as 25 bps better on the long end of the stack, a source said.

The week also saw additional financial issuance from Fifth Third Bank NA and Fifth Third Bancorp, PNC Financial Services Group, Inc., Truist Financial Corp. and Goldman Sachs Group Inc.

Volume beat market estimates of about $20 billion to $25 billion for the week with $2 billion of additional supply priced Friday from Honeywell International Inc.

Deal volume had fallen short in recent weeks with nearly $20 billion of notes sold in the previous week and $6.5 billion in the week prior.

Looking to the week ahead, volume is expected to be front-loaded ahead of the conclusion of the Federal Reserve’s monetary policy meeting on Wednesday, sources said.

About $15 billion to $20 billion of new high-grade supply is anticipated over the week.

Deal windows in November may be slim with the calendar crowded from a slew of economic data releases, mid-term elections and the start of the holiday season, according to market sources, who are looking for about $75 billion to $80 billion of volume for the month.

Flows turn positive

Flows for investment-grade investment fund and ETFs turned positive this week for the first time since August on a big inflow to ETFs and a moderation in outflows from funds, according to a BofA Securities Inc. research note released Friday.

Overall flows of $870 million over the past week ended Wednesday followed a $6.09 billion outflow in the prior week, BofA said.

Outflows from high-grade funds slowed to $3.77 billion this past week from $6.15 billion in the prior week.

Meanwhile, ETF inflows climbed to $4.64 billion from a $50 million inflow a week earlier.

Also, investment-grade corporate fund outflows slowed to $363 million this past week ended Wednesday from $3.62 billion in the previous week, according to Refinitiv Lipper US Fund Flows.

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