US CORP BOND WRAP-Another record in IG market after busy week

By Davide Scigliuzzo and Natalie Harrison

NEW YORK, June 12 (IFR) - High-grade issuers raised a whopping US$36.755bn despite Treasury rate volatility this week to set the record for the most volume raised in a single week in any June month in history, according to IFR data.

This continued ability of issuers to raise such staggering amounts despite wild swings in Treasuries - the 10-year jumped to 2.5% at one point during the week - showed the strength of appetite for US dollar bonds.

Issuers like tech giant Cisco and British American Tobacco (LSE: BATS.L - news) even paid next to nothing in new issue premiums.

"The higher rates actually helped as it attracted more buyers from pension funds and insurance companies that have higher yield bogies," said one syndicate official.

He is expecting around US$25bn of supply next week, and much of that to be front-loaded ahead of the Fed minutes on Wednesday. Another US$26.5bn or so would set a new quarterly record, IFR data shows.

More acquisition finance trades are eyed before quarter end, including a potential US$9bn-equivalent issue for HJ Heinz and Kraft Foods (Sao Paolo: KFGI34.SA - news) which begins marketing next week. Imperial Tobacco (LSE: IMT.L - news) also needs to raise US$5-7bn-equivalent to fund the purchase of cigarette brands from Reynolds American (NYSE: RAI - news) and Lorillard (NYSE: LO - news) .

Reynolds' jumbo US$9bn bond rallied 20bp in secondary after launching on Tuesday, but had given back a lot of those gains in broadly softer markets. By Friday, the 30-year was 13bp tighter than launch, the 20-year 10bp tighter and the 10-year 5bp tighter, the banker said.

TRIBUNE PLANS HIGH-YIELD DEBUT

Primary activity in the US high-yield market is set to pick up, with Tribune Media (Other OTC: TRBNW - news) and Eclipse Resources joining a pipeline of borrowers ready to hit the market after the FOMC meeting.

The US high-yield market saw just US$1.835bn worth of supply this week.

Tribune, a first-time issuer in the market with a Double-B rating by S&P, is looking to raise US$1bn through a two-part offering comprising seven-year non-call three and 10-year non-call five bonds.

Investors gauging fair value are likely to look at similarly rated Sinclair Broadcast (NasdaqGS: SBGI - news) and, further down the rating spectrum, players like Nexstar Broadcasting (NasdaqGS: NXST - news) and Gray Television (Stuttgart: GCZB.SG - news) .

Sinclair's 2024s - the closest comp in terms of rating and maturity for Tribune's new 10-year - were spotted trading at a yield of around 5.625% on Friday.

"The volatility in US Treasuries has put a bit of pressure on long-dated bonds. Tribune will be a good case study," said one syndicate banker.

Eclipse Resources, meanwhile, is looking to raise US$650m through a new eight-year non-call three unsecured notes that will refinance its outstanding 12% PIK notes due 2018s and fund its capital expenditure plan.

High-yield bankers are hoping that the two-day FOMC meeting that is scheduled to wrap up next Wednesday will bring some stability to the Treasury market, which would in turn set the stage for a pick-up in issuance. (Reporting by Davide Scigliuzzo and Natalie Harrison; Editing by Shankar Ramakrishnan)