Short-term bridges taken out to finance spin-offs and acquisitions will need to be replaced with commercial paper and bond issuance at some point, and it’s likely issuers will want to do that before their earnings black-out period in the fourth quarter.Ĭompanies with outstanding M&A and spin-off bridges include Abbott, with a US$7.5bn bridge taken out to spin off its pharmaceutical business Eaton with a US$6.25bn bridge that backed its acquisition of Cooper Industrial Nestle, with a US$8.5bn bridge to back its US$11.85bn takeover of Pfizer Nutrition Walgreen with a US$3.5bn bridge loan taken out as part of its US$6.7bn acquisition of a 45% stake in Alliance Boots Aetna with ab out US$2.5bn of funding in bonds and cp as part of its US$7.3bn purchase of Coventry Health Care and WellPoint w ith abou t US$4.2bn of debt funding needed for its US$4.9bn acquisition of Amerigroup. With market conditions so strong right now there is really no reason to wait for the fourth quarter, when you could see volatility around European sovereigns, the presidential elections and the fiscal cliff.”Ĭorporates rather than FIG issuers will dominate the calendar, according to bankers. “We are looking for about $90-$100bn to be issued in September, as issuers continue to pull forward their funding needs. “September is likely to see the last flurry of large issuance for the year,” said Dan Mead, managing director and head of Financial Institutions Group (FIG) syndicate at Bank of America Merrill Lynch. The same factors are driving September’s issuance expectations, along with concerns among US borrowers that the fourth quarter could be especially volatile because of the presidential elections and the fiscal cliff dilemma. “We are being told to expect big supply post-Labor Day in investment-grade, high-yield and even leverage loans,” said Michael Collins, a senior investment officer with Prudential.Ĭorporates have been pulling their funding plans forward into the summer months to take advantage of overwhelming demand for yield, at a time when low rates had made funding costs the best they have ever experienced.

Aug 30 (IFR) - The US bond markets are bracing for as much as US$130bn of investment-grade and high-yield bond issues in September, with some of the world’s biggest corporates looking to pull forward their fourth-quarter funding plans while the going is good.ĭespite unprecedented amounts of corporate offerings in July and August in both markets, about $80bn to US$100bn of new issuance has built up for the investment-grade market and around US$30bn is estimated for high-yield.

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