High-grade market wraps up record February

By Mike Gambale

NEW YORK, Feb 27 (IFR) - US syndicate desks sold nearly US$40bn in new debt this week, clearing the pipeline for an anticipated US$22bn jumbo deal on Monday from Actavis - the second-largest corporate bond ever.

RBC (Other OTC: RBCI - news) rounded out the week's issuance on Friday with a US$1.4bn two-part trade that priced with negative 5bp to flat concessions, underlining the red-hot state of the market.

In all the high-grade market priced US$39.76bn this week, the biggest weekly tally so far in 2015. It priced US$112.04bn for the month, the biggest February on record.

"The market hasn't been this strong since last Labor Day," one syndicate manager told IFR.

Deals are getting done with big order books and minimal concessions. The average new issue concessions this week was just 0.01bp, while the average book to cover was 3.60.

Conditions are now highly constructive since oil prices have stabilized, and desks are expecting some US$40bn area in issuance next week as March business gets under way.

"Recent volatility in the commodity space has made it extremely difficult for syndicate desks to get deals done, but now it appears the stars are aligned perfectly," said one portfolio manager.

Syndicate desks are expecting US$120bn area next month. March 2014 saw total issuance just under that at US$119.1bn.

ROYAL BANK OF CANADA (Toronto: RY-PB.TO - news)

Royal Bank of Canada (RY), Aa3/AA-/AA, announced a US$ benchmark SEC registered senior unsecured note offering that consists of a 5-year (3/06/2020) fixed and/or FRN. The active bookrunners include Morgan Stanley (Xetra: 885836 - news) , Royal Bank of Canada and SocGen (Paris: FR0000130809 - news) . Settlement date 3/06/2015.

IPTs: low 70s

PRICE GUIDANCE: 5-year FXD T+67bp (the #), 5-year FRN 3mL+52bp (the #)

LAUNCH: US$1.4bn 2-part. US$850m 5yr FXD at T+67bp, US$550m 5yr FRN at 3mL+52bp.

PRICED: US$1.4bn 2-part.

- US$850m. Cpn 2.150%. Due 3/6/2020. Ip USD99.901. Yld 2.171%. T+67bp.

- US$550m. Cpn 3mL+52bp. Due 3/6/2020. Ip par. Yld 3mL+52bp.

BOOK: US$2bn

NIC (NasdaqGS: EGOV - news) : negative 5bp to flat (vs. 2.15% March 2019, adjust 5-10bp for maturity extension; FV= G+67-72bp)

COMPS:

2.150% March 15, 2019 at G+62bp

BMO (Aa3/A+/AA-) 2.375% January 25, 2019 at G+73bp

BNS (Aa2/A+/AA-) 2.050% June 5, 2019 at G+71bp

TD (Aa1/AA-/AA-) 2.125% July 2, 2019 at G+57bp

TD (Aa1/AA-/AA-) 2.250% November 5, 2019 at G+56bp

VOLUME STATISTICS

THIS WEEK'S VOLUME:

59 Tranches for $39.760 BLN

FEBRUARY VOLUME:

146 Tranches for $112.040 BLN

2015 VOLUME:

265 Tranches for $205.340 BLN

WEEKLY TRANCHES FIXED VS FLOATING:

Fixed 48 Tranches for $34.660 BLN

Floating 11 Tranches for $5.100 BLN

MONTHLY TRANCHES FIXED VS FLOATING

Fixed 124 Tranches for $100.890 BLN

Floating 22 Tranches for $11.150 BLN

WEEKLY TRANCHES BY MATURITY IG CORPS:

1 X 1.5-YRS $200M

4 X 2-YRS $1.700BLN

12 X 3-YRS $10.450BLN

13 X 5-YRS $12.300BLN

1 X 5.5-YRS $400M

4 X 7-YRS $2.650BLN

13 X 10-YRS $5.275BLN

1 X 10.25-YRS $800M

2 X 20-YRS $700M

5 X 30-YRS $2.635BLN

1 X 31-YRS $800M

1 X 40-YRS $1.000BLN

1 X PERP $850M

NEW ISSUE METRICS THIS WEEK:

Weekly Average Book To Cover: 3.60

Weekly Average New Issue Concessions: 0.01

VOLUME BY NUMBER OF DEALS

CORP IG THIS WEEK: 31 FOR $39.760 BLN

CORP IG 2015 YTD: 140 FOR $205.340 BLN

CORP IG 2014 YTD: 130 FOR $188.405 BLN

CORP IG 2014 FINAL: 898 FOR $1.102.817 TRN

NOTES: CORP COMPRISED OF IND, FIN, UTL, EM, YNK. AGN/SOV

INCLUDES TLGP/GOVTS (Reporting by Mike Gambale; Editing by Shankar Ramakrishnan and Marc Carnegie)