(Bloomberg) – Syndicate desks await another dovish week in the primary investment grade bond market, asking for between $ 15 billion and $ 20 billion of fresh supply as earnings season picks up speed. Meanwhile, high-yield bond sales are likely to remain active amid a wave of refinancing that has allowed some affected companies to cut borrowing costs.
Just $ 10.6 billion in high-grade bonds valued this week, making it the second-slowest of the year, according to data compiled by Bloomberg. Among the expected lineup for next week’s business is financial issuance from regional banks, along with more from corporations after they report.
Credit investors had a volatile start to the week in stride and spreads rebounded, with strategists at Barclays Plc expecting the market to remain resilient.
“Despite renewed concerns about the growing number of Covid cases, investors continue to view the economic context and corporate earnings potential positively,” strategists led by Bradley Rogoff wrote on Friday.
But with valuations high in both investment grade and high yield, “finding opportunities remains a challenge,” added Rogoff.
A busy earnings schedule next week includes Tesla Inc., General Electric Co., Alphabet Inc., Apple Inc., Boeing Co., Ford Motor Co. and Amazon.com Inc.
Bank of Nova Scotia will call for investors on Monday for a sustainability bonus.
Bank of America Corp. Strategists saw this week’s US junk selloff as an opportunity to buy debt.
“Recent volatility has improved the risk-reward profile at HY going forward,” BofA analysts led by Oleg Melentyev wrote in a note on Friday. The bank increased its forecast for total return over the next 12 months to 3% to 6% from a previous view of 2% to 4.5%.
The junk bond portfolio is light heading into the week with only one known deal priced. Allen Media LLC is selling an additional $ 340 million of 10.5% bonds that are scheduled to trade on July 27.
California Pizza Kitchen Inc. is looking to refinance its bankruptcy debt as its owners ponder a possible sale or initial public offering of the restaurant chain, according to people with knowledge of the matter. The exact timing of the refinancing has not been decided, but it could be launched in the coming weeks, the people said. The deal will target the $ 177 million of debt left on the company’s balance sheet after it emerged from bankruptcy last November.
In leveraged loans in the United States, two dividend-backing deals have meetings scheduled for Monday: the $ 2.5 billion offering from Standard Industries Inc. and the $ 770 million offering from Ring Container Technologies Group LLC. A lender call is also scheduled for Monday for the $ 200 million loan from Wahoo Fitness LLC that finances the purchase of a majority stake in the cycling and resistance training technology company by Rhone Group.
Among the loans due next week are the $ 3.5 billion sale of Pilot Travel Centers LLC to redeem preferred equity, the $ 2 billion refinancing of Air Canada, and the $ 1.4 billion transaction from Sovos Compliance to refinance debt, finance mergers and acquisitions, and finance a shareholder distribution.
In distressed debt, Endo International Plc’s secured debt holders have hired Evercore Inc. as a financial advisor as the drugmaker faces potential damages from opioid-related litigation, according to people familiar with the situation.
Troubled issuer Peabody Energy Corp. is scheduled to report its second-quarter results before the market opens on Thursday, July 29, and AMC Entertainment Holdings Inc. has its annual shareholders meeting on the same day.
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