US high-grade eyes massive week ahead

(Adds Dell, Walgreens)

By Hillary Flynn and Davide Scigliuzzo

NEW YORK, May 6 (IFR) - The US investment-grade bond market is gearing up for what could be one of the biggest issuance weeks of the year, including an expected jumbo acquisition financing for computer giant Dell.

Syndicate desks upped their estimates for next week on Friday as new deals started filtering into the pipeline, and several said the tally could go to US$50bn or beyond.

"There are some chunky trades to be done and a decent slug of M&A," said one syndicate banker.

Dell is eyeing at least US$12bn-US$13bn, according to a banker on the deal, who said marketing for the investment-grade offering could begin as early as Monday.

The trade is part of a larger financing package, which also includes high-yield bonds, to help fund its acquisition of data storage products maker EMC (Taiwan OTC: 5299.TWO - news) .

Kraft Heinz meanwhile was holding calls with investors on Friday ahead of a potential US dollar deal.

The company is also talking with euro and sterling investors, and it could raise as much as US$8bn-equivalent, one investor told IFR.

Pharmacy chain Walgreens Boots Alliance (Xetra: W8A.DE - news) is also scheduled to meet fixed-income investors next week, though no bond sale is expected immediately following the meetings, sources said.

"We have four to five trades looking at next week," a second syndicate banker said.

JOBS DISAPPOINT

Bucking what has been a trend this year, issuers stayed on the sidelines Friday after the nonfarm payrolls print was softer than expected.

But the week still closed at US$29.5bn, still well past what had been expected.

Nonfarm payrolls increased by 160,000 jobs last month, far below the 202,000 economists polled by Reuters had forecast on average.

The number was also lower than the first-quarter average monthly job growth of 200,000.

That spurred a sell-off in equities and credit derivatives in the morning, though by the afternoon stocks were in positive territory.

Even (Taiwan OTC: 6436.TWO - news) amid renewed concerns about growth, deals are expected to clear the market fairly easily, and new issues from this week have held up well in secondary.

Technicals are strong, with US$2.098bn flowing into investment-grade funds for the week ended May 4, bringing the year-to-date net inflow to US$7.883bn, Lipper data show.

A stronger bid from Asian investors is also expected to emerge following holidays in the region.

"I expect you'll start to see ... Asian buyers stepping back in full force next week," said Matt Brill, portfolio manager at Invesco (NYSE: IVZ - news) . (Reporting by Hillary Flynn and Davide Scigliuzzo; Editing by Natalie Harrison and Marc Carnegie)