By Will Caiger-Smith
NEW YORK, Jan 5 (IFR) - The US high-grade primary market got2016 started in earnest on Tuesday, with eight new bondofferings coming to market a day after jitters about China keptissuers on the sidelines.
Big-name US credits and Yankee bank borrowers got the yearunder way with an enthusiastic but cautious start, taking adefensive approach to bookbuilding in the wake of Monday'scarnage in the stock markets, which forced at least sixcorporates to hold off until the dust settled.
Tuesday's credits largely targeted conservativethree-to-five year maturities and offered up to 30bp in premiumsat initial price thoughts, a concession to the volatilityworries that have plagued the market even as it wound up anotherrecord issuance year in 2015.
But there was a sense that stock investors had panicked onMonday, when disappointing data out of China revived worriesabout growth and volatility on the first trading day of 2016.
"There's a feeling that equities overreacted yesterday," onebanker away from Tuesday's deals told IFR. "People are minded tojust get on with it and press ahead."
As US indices showed a firmer footing on Tuesday -- the CDXIG25 was 0.3bp tighter, while the CDX HY25 was 0.10 pointshigher at mid-morning -- borrowers got what is forecast to beanother record year of issuance properly under way.
YANKEES FIRST OUT
Yankee banks Santander UK Holdings (Abbey) and Barclaysjoined domestic credits Citigroup, Walt Disney, Ford MotorCredit, Harley-Davidson Financial Services, John Deere Capitaland Entergy Arkansas in the fray.
Santander UK, rated Baa1/BBB/A, was looking to price afive-year senior unsecured bond that was being shown withinitial price thoughts of 155bp-160bp over Treasuries, implyinga new issue concession of 25bp-30bp over the issuer's existingcurve, a banker on the deal said.
Back in October, Abbey priced a US$1bn five-year unsecuredat T+155bp - flat to its curve after pulling in pricing by15bp-20bp. That bond, one of the pricing comparables for the newtrade, has since tightened to G+130bp.
Barclays (Baa3/BBB/A) meanwhile announced a self-led fiveand 10-year senior deal, with IPTs of 165bp and 230bp overTreasuries, respectively.
That implied new issue concessions of around 30bp based onwhere the bank's 2.875% June 2020 and 3.65% March 2025 bondswere trading, at G+132bp and G+197bp respectively.
Walt Disney, rated A2/A/A, was out with a five-partercomprising three, five, 10 and 30-year fixed notes as well as athree-year floater. On initial price talk of 50bp area, high60s, high 90s and 120bp area respectively, the bonds looked tobe offering some 20bp in concession.
"It's a pretty safe name, and the market was much moresupportive this morning as opposed to yesterday morning. It's abusy market today as opposed to yesterday," one banker said.
Disney was last in the dollar market in September 2015 witha US$2bn three-part bond issue with three, five and 10-yearmaturities, which priced flat to its curve.
The 1.5% September 2018s were trading at G+37bp, the 2.15%September 2020s at G+46bp and 3.15% September 2025s at G+73bp.
Based on those levels, the company looks to be offeringconcessions for the new deal of around 20bp on the shorterthree-year, five-year, and 10-year tranches.
It is offering a new issue concession of approximately 10bpon the 30-year tranche, the banker said.
"People are getting a feeling on how much spread is neededto clear these trades (in the new year) and it's better to startwider than to start too tight and have to deal with it later,"the banker said.
The active bookrunners on the deal are Citigroup andDeutsche Bank. The passive bookrunners are Credit Suisse,Mizuho, and the Royal Bank of Canada. (Reporting by Will Caiger-Smith; Additional reporting byHillary Flynn; editing by Shankar Ramakrishnan and MarcCarnegie)
Barclays (BARC)
