Wall Street is bracing for flurry of new debt sales next week, with two jumbo deals expected to kick off the busiest primary high-grade calendar since mid April and high-yield issuance poised for a record first-half.

Blue-chip companies may raise between $40 billion and $45 billion next week, dominated by non-financial corporations exiting voluntary blackout periods. The two jumbo transactions are expected early in the week, according Bloomberg’s Brian Smith. The high end of the projection is nearly double this week’s supply volume of $26.15 billion and would make it the busiest week since back-to-back record-setting bank deals led to a $52 billion week in mid-April.

Rates on 10-year United States (US) government notes -- a benchmark for global borrowing -- plunged more than 10 basis points after US job growth significantly undershot forecasts in April, suggesting that difficulty attracting workers is challenging the economic recovery.

While lower yields may boost issuance, particularly for borrowers looking to refinance existing debt, the uncertainty makes it harder for companies to plan expenses, according to Dominique Toublan, head of US credit strategy at BNP Paribas SA.

“This was a big miss versus expectations,” Toublan said in an interview Friday. “It seems the experts don’t quite understand the payrolls dynamics. Is there something else we don’t understand?”

Record sales

The issuance blitz in the US corporate high-yield primary market almost seems unstoppable, thanks to record-low borrowing costs and huge investor appetite for risky assets. Supply is roughly $1.5 billion short of surpassing the current high of $210.44 billion set in the first half of 2020.

Chemical products manufacturer Polar US Borrower LLC is expected to price its $300 million senior unsecured junk bonds on Tuesday, while a $450 million deal to help fund the acquisition of Club Car by Platinum Equity from Ingersoll Rand may price on Thursday.

In the leveraged loan market, behavioural-health software provider Therapy Brands Holdings LLC is set to wrap up its $400 million in term loans to support its $1.2 billion acquisition by private equity firm KKR & Co. There’s a bank meeting for Hilton Grand Vacations $1.3 billion term loan to partially support the acquisition of Diamond Resorts International on May 10, as well as one for Pathway Vet Alliance LLC’s $200 million incremental loan planned for Thursday.

More opportunistic borrowers may come as investors continue to pour money into US leveraged loan funds, which have seen the longest positive streak since 19 weeks between February and June 2018. JPMorgan Chase & Co credit analysts have revised upward their supply expectations across US credit, most significantly for leveraged loans. The bank now sees $775 billion of full-year leveraged loan issuance and $525 billion of high-yield bond sales -- increases of $500 billlion and $150 billlion, respectively.

“Leveraged credit issuers are capitalizing on record-low yields in 2021 at an unprecedented pace as the rapid recovery in the global economy and Fed’s easy monetary stance are boosting demand for both high-yield bonds and leveraged loans,” strategists including Nelson Jantzen and Eric Beinstein wrote in a Friday report.

In distressed credit, the bid to buy Hertz Global Holdings Inc. out of bankruptcy is coming to a head with an expected auction on Monday. An investor group including Centerbridge Partners prepared a new offer to counter the one currently chosen by the company, backed by Knighthead Capital Management and Certares Management, Bloomberg reported.

Also on Monday, Ron Perelman’s cosmetic giant reports first quarter results followed by an investor call. Sequential Brands Group faces a forbearance deadline that day. Later in the week mall owner Washington Prime’s forbearance agreement is scheduled to expire May 12 pending another extension.

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