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US high-grade market surges to biggest June on record

By Danielle Robinson

NEW YORK, June 20 (IFR) - The US investment-grade bond market wrapped up a banner week Friday that saw more than US$20bn priced, making this the biggest June on record for new issuance.

Meanwhile performances were on the whole outstanding, with only two trades pushing wider in the secondary, as the chronic lack of liquidity and the Fed's market friendly comments sent some deals screaming in as much as 27bp.

Assured Guaranty's US$500m 10-year - it was the first monoline insurer to tap the markets since the crash - was trading at 210bp bid from 237.5bp at issue.

Intesa Sanpaolo's Tier 2 subordinated 10-year notes were 12bp tighter than the new issue spread of 240bp and Societe Generale's 6.0% perpetual non-call 5.5-year Additional Tier 1 trade was trading solidly around par.

An obvious winning trade was Target's US$2bn of five and 10-year notes, on which investors forced a 10bp widening on both tranches earlier in the week.

The US$1bn 2.3% five-year was 7bp better than its T+60bp new issue spread, while the US$1bn 3.5% 10-year was 8bp better than its 90bp new issue level.

Demand for new issues has become overwhelming, particularly in high-beta credits.

More than US$29bn of orders poured in for transactions by SocGen, Intesa and Williams Companies on Thursday, a day after the Fed reassured markets that there would be no imminent change to policy.

Indeed, demand has so overwhelmed supply that investors are refusing to let go of anything in their portfolios.

"There is just no liquidity in the secondary market," said one syndicate manager. "No one is selling."

Some desks are expecting about US$15bn of deals in the week ahead, skewed toward corporates.

This week's US$20.22bn of issuance from 20 transactions has already pushed the month to US$76.24bn, the biggest June ever.



31 Tranches for $20.220 BLN


Fixed 28 $18.720 BLN

Floating 3 X $1.500 BLN

31 Tranches for $20.220 BLN


1 X 2-YRS $1.000 BLN

4 X 3-YRS $1.300 BLN

7 X 5-YRS $4.950 BLN

2 X 7-YRS $1.750 BLN

11 X 10-YRS $7.200 BLN

1 X 15-YRS $500M

3 X 30-YRS $1.570 BLN

1 X 50-YRS $450M

1 X PERP $1.500 BLN

31 Tranches for $20.220 BLN


110 Tranches for $76.240 BLN

Fixed Vs Floating This Month

Fixed 98 X $68.440 BLN

Floating 12 X $7.800 BLN (Reporting by Danielle Robinson; Editing by Shankar Ramakrishnan and Marc Carnegie)