Crossover credit General Motors Financial reopened the US high-yield bond market on Wednesday after a three-week hiatus, seizing on stronger conditions spurred by strong economic data. The US $2.25bn drive-by deal, which saw US $5.5bn in demand, was announced alongside 10 new high-grade deals as quality issuers who have steered clear of recent volatility helped kick-start the primary markets.
General Motors Co was upgraded by S&P in September to BBB-, the lowest investment-grade rating, in a critical step in the automaker's recovery from its 2009 bankruptcy and reorganisation.
It still has high-yield Ba1 and BB+ ratings from Moody's and Fitch.
Wednesday's three-tranche issue was split between a US $1bn five-year that priced at Treasuries plus 170bp, a US $250m five-year floating-rate note that came at three-month Libor plus 156bp and a US $1bn 10-year issue which priced at Treasuries plus 210bp.
Pricing was pulled in on the five-year fixed by 20bp from T+190bp area initial price thoughts and by 15bp on the ten-year tranche from IPTs of T+225bp area.
"People are waiting for more days of stability like we had today," said one syndicate banker.
"Companies on the sidelines want to go, and when the market gets stronger they will pull the trigger."
The waiting pipeline includes a US $225m bond to help back the US $1.215bn buyout of Angus Chemical by Golden Gate Capital.
Led by Morgan Stanley, the bond piece is part of a US $795m debt financing package which also consists of a US $355m term loan, a US $150m-equivalent euro-denominated term loan and a US $65m revolver. A roadshow is expected to launch next week.
The GM deal was launched amid a rally in both equity and credit markets. The HY CDX 23 index was about a quarter-point higher at 105.2bp, while stocks bounced back after five straight days of losses.