US IG WRAP-High grade catches breath after slowest week of 2015

By Danielle Robinson

NEW YORK, April 2 (IFR) - The high-grade market took a much-needed break from the record US$150bn issuance in March, with just US$3.75bn of deal volume this week.

The tally makes it the slowest week so far this year, and with expectations of just US$15bn area in the week ahead, the first part of April should give the market time to catch its breath before the next wave of jumbo deals.

"April looks fairly quiet because a lot of companies are going into blackout before releasing first quarter earnings," said one syndicate manager.

"But there are some M&A financings that we could see come to market after companies report earnings. We are hearing anywhere from US$60bn to US$90bn for April."

Companies with M&A financings still in the pipeline include Halliburton, Reynolds American (NYSE: RAI - news) and UnitedHealth.

The decline in new issue volume is starting to pay off.

The last two full weeks of March saw weekly average new issue concessions of 7.53bp and 7.83bp prespectively, and a number of companies were forced to offer NICs in the double digits.

This week the average new issue concession has been 3.63bp and some deals, notably Molex's US$1bn debut offering of five and 10-year notes, have reaped huge rewards for investors.

More than US$5bn of orders came in for the electronic components maker, and on Thursday its five-year was trading 10bp tighter and its 10-year 7bp tighter than their respective new issue spreads of 155bp and 205bp.

"The market is constructive. It is there," the syndicate manager said. (Reporting By Danielle Robinson; editing by Shankar Ramakrishnan)