USD Swaps: Debt ceiling brinksmanship; Pfizer $31bn mega 8-part
Debt brinksmanship continues; Pfizer $31bn
Treasuries sold off in a bear flattening move as brinksmanship over the debt ceiling increased and concerns from the business sector are growing. Equities closed lower (DJIA -1.01%, S&P -0.41% and Nasdaq -0.18%). The 10y note yield is back at 3.53% or 2.4bps higher in yield while 2s10s is last 2.2bps flatter at -53.5bps and 5s30s 2bps lower at 35.1bps.
Pfizer launched its $31bn 8-part M&A driven jumbo – the fourth largest corporate jumbo deal, according to sources. The deal garnered an order book of $85bn or 2.74x and saw pricing narrow by 20bps from initial price talk, sources say.
Meanwhile, Fed talk was hawkish today, with Chicago Fed President Goolsbee (voter) saying “I think it is far too premature to be talking about rate cuts” and “I haven’t committed or decided anything.” Meanwhile Vice Chairman Williams (voter) said that while inflation is moving in the right direction, it remains “unacceptably high.”
The swap spread curve saw a steepening move versus the underlying flattening amid above average volumesbest seen in the front end and belly. The 20y and 30y widened, ahead of tomorrow’s $15bn 20y auction.
As for IG new issuance, aside from the mammoth $31bn Pfizer 8-part, just one other entrant was seen (ex-SSA) to bring the day’s total to $33.2bn. Week to date volumes jumped to $48.25bn, eclipsing the $30bn expected. Month to date at just over the halfway mark stands at $113.4bn or just around $20bn shyof the expected $135bn for the month.
2s -9.875bps (-0.125bps), 3s -14.625bps (-0.875bps), 5s -21.5bps (-0.25bps), 7s -28.875bps (unch), 10s -29.5bps (unch), 20s -66.375bps (+0.875bps), 30s -72.5bpsbps (+0.75bps).
- Kommunekredit plans a $1bn 5y at around swaps +47bps. Leads are BMO, Daiwa, DB, RBC and SEB. Expected to price tomorrow.
- Tokyo plans a USD 3y to 5y through Barclays, Goldman, Citi and MS.
- Abu Dhabi real estate firm Aldar Investment (Baa1) is preparing a USD 10y Green Sukuk through ADCB, ADIB, DIB, ENBD, FADB, HSBC, Mashreq and StanChart after investor meetings from May 16.
- Saudi Arabia plans USD 6y and 10y Sukuks. Leads Citi, JPM and StanChart. A1/A+. +80bps and +100bps.
- Pfizer launched a $31bn 8-part ($3bn 2y, $3bn 3y, $4bn 5y, $3bn 7y, $5bn 10y, $3bn 20y, $6bn 30y, $4bn 40y). Leads BofA, Citi, GS and JPM. A1/A+. +60bps, +75bps, +95bps, +115bps, +125bps, +130bps, +145bps, +160bps.
- Ovintiv Bank launched a $2.3bn 4-part ($600m 2y, $700m 5y, $600m 10y and $400m 30y). Leads GS, MS, JPM, RBC and TD. Baa3/BBB-/BBB-. +160bps, +215bps, +275bps, +325bps.
- CADES priced a $3bn 5y Social. Leads BNPP, Goldman, NatWest and SocGen. Aa2/AA. Books above $5bn. Mid swaps +45bps.
- Japan International Cooperation Agency (JICA) priced a $1.25bn 5y Sustainable. Leads Barclays, Citi, Daiwa and MS. A+. Mid swaps +76bps.
- CoE Development Bank priced a $1bn 3y Social Global. Leads are CA, MS, NatWest and Nomura. Swaps +24bps.
- Singapore Tech Engineering (Aaa/AA+) priced a $500m 3y. Leads JPM (B&D), DBS and StanChart. +60bps.