Uncategorized
Supply and exchanges take center stage for the week
admin | May 3, 2019
This document is intended for institutional investors and is not subject to all of the independence and disclosure standards applicable to debt research reports prepared for retail investors. This material does not constitute research.
May could shape up to be a large month for issuance, with earnings season starting to wrap up and the Fed emphasizing patience. Bristol-Meyers Squibb and IBM are both expected to issue new debt to fund their acquisitions of Celgene and Red Hat, respectively, with Bristol-Meyers also likely to conduct an exchange of nearly $20 billion of existing Celgene notes.
Weekly issuance ahead of forecasts
Despite being plagued with negative headlines of late, both Ford Motor Credit (F) and Boeing Company (BA) successfully tapped the investment grade market this week. Ford, on the heels of a better than expected 1Q results and affirmed full year guidance, issued $1.25 billion of 10-year notes to refinance its upcoming maturity. BA priced $3.5 billion of new debt across five tranches for general corporate purposes. While the new issue market took a bit of a pause on Wednesday ahead of the Fed decision, by Thursday it was back up and running with roughly $7 billion of debt priced across six issuers. The $23 billion of investment grade debt priced through Thursday, May 2nd was already ahead of forecasts of $20 billion for the week.
But more to come
With earnings season starting to wrap up (with the exception of the retailers that report a month later) and the Fed remaining patient, May could shape up to be a large month for issuance. Rumored on deck are Bristol-Myers Squibb (BMY) and International Business Machines (IBM). BMY could be in the market for up to $15 billion as it looks to fund the acquisition of Celgene (CELG). The deal is expected to close by 9/30/19. Furthermore, BMY will be looking to exchange $19.85 billion of CELG notes for new BMY notes. These new BMY notes will be identical to the existing CELG notes in terms of principal amount, coupon and maturity. IBM could be looking to issue up to $25 billion of new debt to fund the Red Hat acquisition as well as finance upcoming debt maturities. IBM has $5.0 billion of debt maturing for the remainder of 2019, after $1.5 billion of debt matured back in February.
T announces tender/exchange of TWX notes
T launched exchange offers for all 26 series of the outstanding Time Warner (TWX) debt. T will exchange all TWX debt for T Global notes with the same principal, coupon and maturity. Concomitantly, T announced the cash tender of 9 series of the aforementioned TWX debt, thereby giving holders of the 9 series of notes the option to tender or exchange. In connection with the tender/exchange, T is soliciting consents from holders to eliminate certain restrictive covenants including cross default language associated with the 6.85% notes due 2026, 6.625% notes due 2029 and 8.3% notes due 2036. Both the exchange and tender incentivize holders to participate by the early participation date, May 15, 2019 5pm NYC time, with full $1,000 principal amount on the exchange and a $30 tender payment per bond on the tender offer. Both expire on 5/31/19 at 9am NYC time. The potential for an exchange of TWX debt was discussed back in the weekly piece on 2/1/19 given that the TWX bonds are guaranteed by Historic Time Warner, HBO and Turner Broadcasting and are structurally senior to T parent debt.
This material is intended only for institutional investors and does not carry all of the independence and disclosure standards of retail debt research reports. In the preparation of this material, the author may have consulted or otherwise discussed the matters referenced herein with one or more of SCM’s trading desks, any of which may have accumulated or otherwise taken a position, long or short, in any of the financial instruments discussed in or related to this material. Further, SCM may act as a market maker or principal dealer and may have proprietary interests that differ or conflict with the recipient hereof, in connection with any financial instrument discussed in or related to this material.
This message, including any attachments or links contained herein, is subject to important disclaimers, conditions, and disclosures regarding Electronic Communications, which you can find at https://portfolio-strategy.apsec.com/sancap-disclaimers-and-disclosures.
Important Disclaimers
Copyright © 2025 Santander US Capital Markets LLC and its affiliates (“SCM”). All rights reserved. SCM is a member of FINRA and SIPC. This material is intended for limited distribution to institutions only and is not publicly available. Any unauthorized use or disclosure is prohibited.
In making this material available, SCM (i) is not providing any advice to the recipient, including, without limitation, any advice as to investment, legal, accounting, tax and financial matters, (ii) is not acting as an advisor or fiduciary in respect of the recipient, (iii) is not making any predictions or projections and (iv) intends that any recipient to which SCM has provided this material is an “institutional investor” (as defined under applicable law and regulation, including FINRA Rule 4512 and that this material will not be disseminated, in whole or part, to any third party by the recipient.
The author of this material is an economist, desk strategist or trader. In the preparation of this material, the author may have consulted or otherwise discussed the matters referenced herein with one or more of SCM’s trading desks, any of which may have accumulated or otherwise taken a position, long or short, in any of the financial instruments discussed in or related to this material. Further, SCM or any of its affiliates may act as a market maker or principal dealer and may have proprietary interests that differ or conflict with the recipient hereof, in connection with any financial instrument discussed in or related to this material.
This material (i) has been prepared for information purposes only and does not constitute a solicitation or an offer to buy or sell any securities, related investments or other financial instruments, (ii) is neither research, a “research report” as commonly understood under the securities laws and regulations promulgated thereunder nor the product of a research department, (iii) or parts thereof may have been obtained from various sources, the reliability of which has not been verified and cannot be guaranteed by SCM, (iv) should not be reproduced or disclosed to any other person, without SCM’s prior consent and (v) is not intended for distribution in any jurisdiction in which its distribution would be prohibited.
In connection with this material, SCM (i) makes no representation or warranties as to the appropriateness or reliance for use in any transaction or as to the permissibility or legality of any financial instrument in any jurisdiction, (ii) believes the information in this material to be reliable, has not independently verified such information and makes no representation, express or implied, with regard to the accuracy or completeness of such information, (iii) accepts no responsibility or liability as to any reliance placed, or investment decision made, on the basis of such information by the recipient and (iv) does not undertake, and disclaims any duty to undertake, to update or to revise the information contained in this material.
Unless otherwise stated, the views, opinions, forecasts, valuations, or estimates contained in this material are those solely of the author, as of the date of publication of this material, and are subject to change without notice. The recipient of this material should make an independent evaluation of this information and make such other investigations as the recipient considers necessary (including obtaining independent financial advice), before transacting in any financial market or instrument discussed in or related to this material.
Important disclaimers for clients in the EU and UK
This publication has been prepared by Trading Desk Strategists within the Sales and Trading functions of Santander US Capital Markets LLC (“SanCap”), the US registered broker-dealer of Santander Corporate & Investment Banking. This communication is distributed in the EEA by Banco Santander S.A., a credit institution registered in Spain and authorised and regulated by the Bank of Spain and the CNMV. Any EEA recipient of this communication that would like to affect any transaction in any security or issuer discussed herein should do so with Banco Santander S.A. or any of its affiliates (together “Santander”). This communication has been distributed in the UK by Banco Santander, S.A.’s London branch, authorised by the Bank of Spain and subject to regulatory oversight on certain matters by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA).
The publication is intended for exclusive use for Professional Clients and Eligible Counterparties as defined by MiFID II and is not intended for use by retail customers or for any persons or entities in any jurisdictions or country where such distribution or use would be contrary to local law or regulation.
This material is not a product of Santander´s Research Team and does not constitute independent investment research. This is a marketing communication and may contain ¨investment recommendations¨ as defined by the Market Abuse Regulation 596/2014 ("MAR"). This publication has not been prepared in accordance with legal requirements designed to promote the independence of research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. The author, date and time of the production of this publication are as indicated herein.
This publication does not constitute investment advice and may not be relied upon to form an investment decision, nor should it be construed as any offer to sell or issue or invitation to purchase, acquire or subscribe for any instruments referred herein. The publication has been prepared in good faith and based on information Santander considers reliable as of the date of publication, but Santander does not guarantee or represent, express or implied, that such information is accurate or complete. All estimates, forecasts and opinions are current as at the date of this publication and are subject to change without notice. Unless otherwise indicated, Santander does not intend to update this publication. The views and commentary in this publication may not be objective or independent of the interests of the Trading and Sales functions of Santander, who may be active participants in the markets, investments or strategies referred to herein and/or may receive compensation from investment banking and non-investment banking services from entities mentioned herein. Santander may trade as principal, make a market or hold positions in instruments (or related derivatives) and/or hold financial interest in entities discussed herein. Santander may provide market commentary or trading strategies to other clients or engage in transactions which may differ from views expressed herein. Santander may have acted upon the contents of this publication prior to you having received it.
This publication is intended for the exclusive use of the recipient and must not be reproduced, redistributed or transmitted, in whole or in part, without Santander’s consent. The recipient agrees to keep confidential at all times information contained herein.
