NEW YORK: Companies are expected to keep borrowing in the United States corporate investment-grade bond market next week even as funding costs march higher on rising interest rates and Russia’s invasion of Ukraine.

       Wall Street syndicate desks are projecting as much as US$25bil (RM105.2bil) of fresh high-grade supply, a drop from over US$37bil (RM155.79bil) raised this week.

       Sales for March are poised to surpass the US$200bil (RM842.1bil) mark.

       This will break it into the top four months on record, according to data compiled by Bloomberg.

       The investment-grade market is also anticipating a potential mega-bond deal from Oracle Corp to help fund its pending acquisition of medical records provider Cerner Corp, though the timing is uncertain.

       Issuance has been accelerating despite the fact that the pandemic-era days of dirt-cheap credit are over and borrowers are having to entice investors with elevated new issue concessions.

       The outsized outperformance of newly-minted high-grade bonds relative to the secondary market has also faded, according to JPMorgan Chase & Co.

       “There is now once again more risk involved in new issues which in turn may moderate demand unless new issue concession increase once again,” JPMorgan credit strategists led by Eric Beinstein and Nathaniel Rosenbaum wrote in a note.

       There seems to be a double-edged sword in the US high-yield market.

       Apollo Global Management Inc is preparing to launch an offering of secured and unsecured bonds backing its buyout of Novolex Holdings LLC, according to people with knowledge of the matter.

       The debt financing also includes a sustainability-linked leveraged loan, which would be the largest ever in the US, Bloomberg-compiled data showed.

       The junk primary market is having the slowest month in two years, driven by rising inflation concerns, a hawkish Federal Reserve and the war in Ukraine.

       Meanwhile, funds that buy the bonds have now seen cash exits for 11 straight weeks after US$2.7bil (RM11.36bil) was pulled for the period ended March 23, Refinitiv Lipper data showed.

       Bank of America Corp strategists Oleg Melentyev and Eric Yu lowered their 2022 US junk-bond issuance estimate by US$55bil (RM231.57bil) Friday, calling the absence of issuance a “double-edged sword” that’s helpful in the immediate sense of supporting market technicals.

       Only one US leveraged-loan issuer is holding a lender call next week.

       Specialty chemical company Solenis will conduct outreach today for a sale marked for debt repayment and general corporate purposes.

       Commitments on four deals are due, including Houghton Mifflin Harcourt Co’s offering that supports Veritas Capital’s buyout of the company.

       In the distressed debt market, Hersha Hospitality Trust has covenant waivers on a credit facility set to expire on March 31.

       Finally, US holders of Russia’s sovereign and corporate bonds will be keenly following delayed coupon payments and those due next week.

       An increasing number of payments are getting stuck in a web of financial intermediaries that are struggling to comply with international sanctions against Russian president Vladimir Putin and his allies. — Bloomberg