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By Mike Gambale and Davide Scigliuzzo
NEW YORK, Sept 7 (IFR) - The US corporate bond market is offto a roaring start after the Labor Day holiday in what isshaping up to be one of the busiest weeks of the year forprimary issuance.
Twelve investment-grade borrowers launched US$18.225bn inbonds on Wednesday, taking supply in the past two days to astaggering US$40.8bn.
The latest surge comes hot on the heels of the busiest dayof the year for primary activity on Tuesday by number of dealsafter 14 issuers sold US$22.575bn of bonds.
"A lot of it is typical September funding, but issuers arealso being opportunistic and taking risk off the table now,"said a syndicate manager.
"There is more talk about US rate hikes and presidentialelection risks could take the shine off the market."
Syndicate bankers are forecasting up to US$130bn of supplythis month, which will make it one of the most active Septemberson record. Volumes for the year are also just US$36bn away fromcrossing the US$1trn mark.
In 2015 - the fifth consecutive year of record USinvestment-grade issuance - the US$1trn mark was reached onSeptember 30, IFR data shows.
Shell International Finance launched the biggest deal of theday, a US$4.75bn five-part trade that included maturities ofthree and 30 years, but Yankee banks also boosted primaryissuance volumes.
Mizuho Financial Group was set to raise US$3.25bn from athree part issue, Royal Bank of Scotland launched a US$2.65bnseven-year senior holdco bond and Nationwide Building Societylaunched a US$1.25bn 10-year subordinated Tier 2bond.
Another large deal to finance drugmaker Shire's US$32bnacquisition of Baxalta is also being lined up for next week,according to a note sent to investors and seen by IFR.
The flurry of deals is being driven in part by what remainsa low rate environment for borrowers, and a good opportunity torefinance more expensive debt and extend maturities. Issuers arealso keen to tap the market before any potential volatilitylater in the year.
The junk bond market has also burst to life this week withat least 12 new deals announced, mostly to refinance debt.
Companies from a wide range of industries - from energy toconsumer products - and rated across the entire junk spectrumare seeking to sell new debt.
The majority of junk-rated borrowers in the market will usefunds raised to buy back notes close to maturity or refinanceexisting loans.
Packaging company Ardagh Group led the pack on Wednesday, asit raised US$1.715bn-equivalent through a rare payment-in-kindtoggle note in US dollars and euros.
Strong demand for the paper allowed the company to upsizethe deal by US$150m from the amount originally targeted.
The Triple C-rated company, which said it achieved a blendedinterest rate of 6.8% on the offering, will use proceeds torefinance outstanding debt.
"If you have bonds callable any time soon, it is very, veryattractive to issue (now)," said Peter Schwab, a high-yieldportfolio manager at Pax World. "It is a sign of the globaldesperation for yield." (Reporting by Mike Gambale and Davide Scigliuzzo; Additionalreporting by Hillary Flynn; Writing by Natalie Harrison; Editingby Sudip Roy, Paul Kilby and Shankar Ramakrishnan)
