Corporate-Bond Market Absorbs Nine Deals Tuesday

Corporate issuance in 2012 continues at a robust pace, with nine investment-grade borrowers selling debt in Tuesday's market.

Eight of the deals add up to $3.925 billion; the size of the ninth, a four-part deal from SABMiller PLC (SAB.JO, SBMRY), has yet to be determined, but one syndicate manager away from the deal estimated its size at around $4 billion.

"Companies continue to term out their maturity profiles or, in some cases, to prefund their acquisitions," said Scott Kimball, portfolio manager at Miami-based Taplin, Canida & Habacht LLC, which sub-advises the BMO/TCH corporate income fund.

Kimball said deals are coming with only moderate concessions--the extra yield demanded by investors in the primary market--indicating that appetite for credit is holding up fairly well so far this year.

"But the market is not agnostic to credit risk," he said. "The market is looking at specific issuers and making the riskier ones offer a decent concession."

The diversity on Tuesday's docket includes energy, utility, retail and beverage companies.

Larger deals include a $900 million offering from John Sevier Combined Cycle Generation LLC, which is run by the Tennessee Valley Authority, and an $800 million offering from Macy's Inc. (M), which is selling 10- and 30-year bonds.

Enbridge Inc. (ENB), a Canadian energy-transport company, is also marketing $550 million of 10-year bonds.

A key gauge of the corporate bond market, Markit's CDX North America Investment-Grade Index, had improved 1.9% as of mid-morning, while a similar index tracking the high-yield market was up 0.4%.

Smaller deals include a $300 million, 10-year offering from Valspar Corp. (VAL), a $250 million 30-year bond deal from Alabama Power, a $300 million offering of five-year notes from Entergy Corp. (ETR) and a $325 million 30-year deal from Arizona Public Service.

BBVA Banco Continental SA is also marketing its $500 million offering of five-year notes. The deal was supposed to be priced Monday but was reportedly held back by a document delay.

The wide range of deals follows a busy Monday in which seven companies floated $8.85 billion of debt, according to Dealogic. The first week of the new year saw $22.6 billion of deals in just four days.

A syndicate manager Tuesday his $20 billion volume estimate remains unchanged despite the active start to the week, in part because he expects issuers to front-load their deals early in the week before the market slows down a bit ahead of the Martin Luther King Jr. long weekend.

   -By Patrick McGee, Dow Jones Newswires; 212-416-2382; 
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