High-grade US bond issuers could borrow US$30b next week

Corporate bond sales are expected to resume in earnest next week after taking a breather in late December.

Investment-grade companies may borrow US$30 billion in the coming five trading days and up to US$100 billion in lighter-than-normal sales volume during the month, according to Bank of America Corp. credit strategists led by Hans Mikkelsen, Bloomberg reports.

January’s issuance will be front-loaded with foreign borrowers tapping the U.S. high-grade market in the first couple of weeks as domestic firms enter voluntary earnings blackout periods, the analysts said in a report.

T-Mobile US Inc., Walgreens Boots Alliance Inc., Conagra Brands Inc. and Micron Technology Inc. are among companies scheduled to report earnings next week.

“There could be some M&A-related issuance in the pipeline, as well as a wildcard factor from the U.S. 5G license auction that‘s drawing bidders like AT&T, Charter, Comcast, T-Mobile and Verizon among others and reaching much higher-than-expected valuations,” the analysts wrote.

The high-yield primary market is also expected to spring back into action next week, with one of the market’s top-five dealers expecting more borrowers to return in the new year as the “extremely attractive” conditions should continue at least into the first quarter.

Average January junk-bond issuance over the last six years has been in the range of US$20 billion, with annual supply forecasts largely ranging from about US$300 billion to US$375 billion. That compares to an all-time high of US$431.8 billion in 2020, according to data compiled by Bloomberg.