Yahoo Finance 
Bank of America leads four deals in US high-grade bond market
By Will Caiger-Smith
NEW YORK, Nov 21 (IFR) - Bank of America Merrill Lynch led four issuers in the US investment-grade new issue market on Monday, as borrowers grabbed an open issuance window ahead of the Thanksgiving holiday.
Markets were more stable, with less volatility in US Treasuries than in recent sessions.
US 10-year Treasury yields were trading at 2.317%, down from an intraday peak of 2.364% on Friday - the highest yield level in about a year - while the CDX IG 27 index was 0.85bp tighter at 75.95bp, according to Tradeweb.
Much of last week's much bigger than expected US$41.55bn of investment-grade supply was trading at or slightly inside reoffer, according to MarketAxess - giving issuers more impetus to bring deals.
"Markets are excellent," said a DCM (KSE: 024090.KS - news) banker. "Anyone who has a need - or even who doesn't - should be borrowing right now."
Bankers expect around US$10bn of new deals to price during the first two days of this week, with Wednesday likely to be quiet as market participants prepare for Thanksgiving.
Among deals due to price Monday is an 11-year fixed and/or floating rate subordinated bond from Bank of America Merrill Lynch which is callable after 10 years. Initial price thoughts have been set at T+205bp area and Libor equivalent.
BAML has already sold US$6bn in callable senior deals since JP Morgan opened the market for such TLAC-eligible trades in August. The latest foray from BAML would be its first with a subordinated structure.
It follows a similar subordinated deal sold by JP Morgan just over a week ago - before rate volatility intensified - which is trading about 5bp wide of reoffer according to MarketAxess.
The structure theoretically gives the issuer similar benefits to callable senior deals that have been issued over recent weeks, by allowing it to redeem the debt before it stops counting towards its Total Loss Absorbing Capacity buffer.
Enbridge Inc (Dusseldorf: EN3.DU - news) and New York State Electric & Gas Corp announced senior bonds after holding investor calls last week, while BP Capital Markets was also out with a deal.
Enbridge is talking 10-year bonds at T+225bp area and 30-year bonds at T+275bp area. NY State Electric & Gas Corp is talking a 10-year at T+110bp area. BP Capital Markets is talking a seven-year at T+120bp-125bp and a 12-year at T+145-150bp.
Investor (LSE: 0NC5.L - news) demand however is a touch selective at the moment with some junk bond primary issuers facing pushback.
Outsourcing company Conduent has downsized and increased the yield on a junk bond as it looks to finance its spin-off from Xerox (Swiss: XRX.SW - news) , sources told IFR on Monday.
The company set price talk on the eight-year non-call three bond at 9.75%-10%, some 200bp wider than the whispers of high 7% to 8% that were circulated after the deal's announcement last week.
The size of the bond deal was also cut to US$500m from the US$750m originally targeted. (Reporting by Will Caiger-Smith; Additional reporting by Davide Scigliuzzo; Editing by Natalie Harrison and Shankar Ramakrishnan)
