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By Paul Kilby
NEW YORK, Nov 24 (IFR) - Bankers are already calling an endto the week for bond issuance after Vodafone's postponement andgeopolitical tensions left US corporate borrowers preferring towait until after Thanksgiving holidays.
Potential issuers were heard standing down as equity marketsinitially slipped following news that Turkey had downed aRussian warplane.
"There were enough reasons to wait. Vodafone was pulled, andyou walk in to hear about the Russian jet," said one syndicatemanager. "It wasn't a great day."
Indeed, not one US high-grade, or high-yield, borrowerstepped forth on Tuesday, making for what is likely to be one ofthe quietest weeks in a while.
"This is essentially a two-day week," said a high-grade DCM banker.
The week is likely to see just US$2.65bn in volumes - evensmaller-than-expected after telco Vodafone threw in the towelMonday on a 30-year US dollar bond after investors soughtgreater covenant protections.
"People are pushing back on transactions with loosecovenants and that is something that the market needs to beaware of," said a second syndicate official.
Next week will be a different story, however, as anyleftover issuance is pushed over into late November and earlyDecember.
That said, both high-grade and high-yield borrowers willhave to navigate a series of potentially market moving events.
These include a European Central Bank meeting on December 3,when monetary authorities are expected to announce more easing,as well as the OPEC annual meeting and the release of US payrollnumbers on December 4.
The culminating event will be the FOMC on December 16, whenthe Federal Reserve is largely expected to lift rates for thefirst time in nearly a decade.
"There is a lot to keep people on their toes," said thesecond syndicate banker.
Barring any unexpected surprises, such as a flare up in theMiddle East, bankers are predicting anywhere betweenUS$35bn-US$50bn for December. "I think the market can digestthat," said the syndicate official.
Yet while few days are left for issuance, borrowers may wantto get in before 2016 - which could be another record year forUS high-grade corporate issuance amid expectations of more M&Adriven fundings and a spike in refinancings.
US high-grade and high-yield companies face a total ofUS$750bn in maturing debt next year, not to mention US$2.1trn ofannounced M&A transactions, said Wells Fargo in a recent report.
"Credit markets typically slow down after the USThanksgiving holidays...," the bank said. "However this yearcould be a sprint to the finish."
"As a result, 2015 is likely to finish the way it started -with an uptick in market volatility and heavy bond issuance." (Reporting by Paul Kilby; Editing by Natalie Harrison)
