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By Will Caiger-Smith
NEW YORK, Nov 21 (IFR) - Bank of America Merrill Lynch ledfour issuers in the US investment-grade new issue market onMonday, as borrowers grabbed an open issuance window ahead ofthe Thanksgiving holiday.
Markets were more stable, with less volatility in USTreasuries than in recent sessions.
US 10-year Treasury yields were trading at 2.317%, down froman intraday peak of 2.364% on Friday - the highest yield levelin about a year - while the CDX IG 27 index was 0.85bp tighterat 75.95bp, according to Tradeweb.
Much of last week's much bigger than expected US$41.55bn ofinvestment-grade supply was trading at or slightly insidereoffer, according to MarketAxess - giving issuers more impetusto bring deals.
"Markets are excellent," said a DCM banker. "Anyone who hasa need - or even who doesn't - should be borrowing right now."
Bankers expect around US$10bn of new deals to price duringthe first two days of this week, with Wednesday likely to bequiet as market participants prepare for Thanksgiving.
Among deals due to price Monday is an 11-year fixed and/orfloating rate subordinated bond from Bank of America MerrillLynch which is callable after 10 years. Initial price thoughtshave been set at T+205bp area and Libor equivalent.
BAML has already sold US$6bn in callable senior deals sinceJP Morgan opened the market for such TLAC-eligible trades inAugust. The latest foray from BAML would be its first with asubordinated structure.
It follows a similar subordinated deal sold by JP Morganjust over a week ago - before rate volatility intensified -which is trading about 5bp wide of reoffer according toMarketAxess.
The structure theoretically gives the issuer similarbenefits to callable senior deals that have been issued overrecent weeks, by allowing it to redeem the debt before it stopscounting towards its Total Loss Absorbing Capacity buffer.
Enbridge Inc and New York State Electric & Gas Corpannounced 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 and30-year bonds at T+275bp area. NY State Electric & Gas Corp istalking a 10-year at T+110bp area. BP Capital Markets is talkinga seven-year at T+120bp-125bp and a 12-year at T+145-150bp.
Investor demand however is a touch selective at the momentwith some junk bond primary issuers facing pushback.
Outsourcing company Conduent has downsized and increased theyield on a junk bond as it looks to finance its spin-off fromXerox, sources told IFR on Monday.
The company set price talk on the eight-year non-call threebond at 9.75%-10%, some 200bp wider than the whispers of high 7%to 8% that were circulated after the deal's announcement lastweek.
The size of the bond deal was also cut to US$500m from theUS$750m originally targeted. (Reporting by Will Caiger-Smith; Additional reporting by DavideScigliuzzo; Editing by Natalie Harrison and ShankarRamakrishnan)
