>>> Asian Update

Asia Mid-Session Market Update: China trade surplus eases to 9-month lows; BOK on hold with an eye on recovery in H2

***US Session Highlights***
- (US) INITIAL JOBLESS CLAIMS: 247K V 255KE; CONTINUING CLAIMS: 2.087M V 2.09ME
- (US) DEC IMPORT PRICE INDEX M/M: 0.4% V 0.7%E; Y/Y: 1.8% V 1.8%E
- (US) Fed's Harker (hawk, voter): reiterates support for three 'modest' hikes in 2017 - comments in Pennsylvania
- (US) Fed's Lockhart (non-voter): cyclical portion of the recovery has largely played out; the economy is in a place where it can withstand gradual rate hikes - Q&A
- (US) Fed's Evans: US neutral rate is likely around 3%; balance sheet to be addressed when hikes are well underway

***US markets on close: Dow -0.3%, S&P500 -0.3%, Nasdaq -0.2%***
- Best Sector in S&P500: Utilities
- Worst Sector in S&P500: Industrials
- Biggest gainers: TIF +3.6%, AA +3.4%, ABC +2.9%, DISCA +2.6%, LLY +2.5%
- Biggest losers: CINF -6.7%, HES -4.8%, FCX -3.8%, PNC -2.8%, XEC -2.6%
- At the close: VIX 11.5 (+0.3pts); Treasuries: 2-yr 1.19% (+2bps), 10-yr 2.36% (-1bps), 30-yr 2.96% (flat)

***US movers afterhours***
- P: Guides Q4 'to exceed' R$362-374M v $372Me, adj EBITDA -$51M to -$39M; surpasses 4.3M paid subscription customers; plans to cut US employee base by 7% by end of Q1; +7.8% afterhours
- NVLS: Announces corporate restructuring that affects 25 employees; CEO Congleton to step down; effective Jan 15th; +3.2% afterhours
- AAP: Cramer speculates as potential takeover target - CNBC's "Mad Money"; +1.5% afterhours
- APC: Announces sale of Eagleford Shale assets for $2.3B; +0.1% afterhours
- TWO: Files to sell $250M conv unsecured 2022 notes through Credit Suisse; -1.3% afterhours
- HMST: Guides Q4 $0.07-0.09 v $0.49e; Guides FY16 $2.34-2.36 v $2.73e; -3.1% afterhours

***Politics***
- (US) House Speaker Ryan: Don't have a date to replace Obamacare provisions, but it will definitely be in the first 100 days - CNN Town Hall

***Asia Key economic data:***
- (CN) CHINA DEC TRADE BALANCE (USD TERMS): $40.8B V $47.6BE (9-month low)
- (CN) CHINA DEC TRADE BALANCE (CNY-TERMS): 275B V 344.5BE (9-month low)
- (KR) BANK OF KOREA (BOK) LEAVES 7-DAY REPO RATE UNCHANGED AT 1.25%; AS EXPECTED
- (JP) Japan Dec M2 Money Stock Y/Y: 4.0% v 4.1%e; M3 Money Stock Y/Y: 3.4% v 3.5%e
- (NZ) NEW ZEALAND DEC CARD SPENDING M/M: -0.1% V +1.0%E; TOTAL M/M: 0.0% V -0.3% PRIOR
- (SG) SINGAPORE NOV RETAIL SALES M/M: 0.5% V 0.2%E; Y/Y: 1.1% V 1.7%E
- (PE) PERU CENTRAL BANK LEAVES REFERENCE RATE UNCHANGED AT 4.25%

***Asia Session Notable Observations, Speakers and Press***
- Asian equity indices are mixed once again in the final session of the week; Nikkei225 is among the top performers thanks to weaker JPY, as USD/JPY is up for the first time in 5 trading sessions; S&P/ASX200 is under pressure, weighed down by the mining names in the wake of disappointing China trade data; Australia's energy is faring better on oil price recovery, though gold miners are down with precious metal falling about $10 back below $1,200.
- USD majors also mixed - USD/JPY is off the lows with about a 50pip rise above ¥115 and AUD/USD falling over 20pips below $0.7480.
- China trade data saw mixed-negative results - both USD and CNY terms trade balance surplus slowed to 9-month low, but currency played a part in components; In USD terms, Exports fell more than expected at -6.1% v -4.0%e and imports were in line around +3%; In CNY, Exports were slightly better than expected at +0.6% v -0.1%e and Imports were even stronger at +10.8% v +4.2%e. China Customs officials noted there were uncertainties in trading conditions in 2016, and 2017 will retain big downward pressure on China's economy amid the threat of rising protectionism.
- Bank of Korea kept rates on hold for the 8th straight time at 1.25%; In a unanimous desision, BOK also cut its 2017 GDP and CPI forecasts from 2.8% to 2.5% and from 1.9% to 1.8% respectively, but forecast a gradual rise in inflation. Gov Lee remarked that expectations of an improvement in H2 kept the BOK from considering another rate cut.

China:
- (CN) China Customs spokesman: China economy still faces big downward pressure in 2017
- (CN) China Ambassador to US, Cui: China determined to build stronger and stable relationship with US
- (CN) China NDRC official: to continue cutting steel and coal overcapacity - financial press
- (CN) Former SAFE official Guan Tao: Yuan move last week was not due to the PBOC intervention - Shanghai Securities News
- (CN) China State-owned Assets Supervision and Administration Commission (SASAC) chief Xiao Yaqing: Targets SOE profit of 3-6% in 2017; To boost controls of debt risks at SOEs - Chinese press

Japan:
- (JP) BOJ Quarterly Public Opinion of Household Sentiment: Maintains view of 2% inflation in both 1-year and 5-year time frames

***Asian Equity Indices/Futures (00:30ET)***
- Nikkei +0.7%, Hang Seng +0.4%, Shanghai Composite -0.3%, ASX200 -0.8%, Kospi -0.5%
- Equity Futures: S&P500 +0.1%; Nasdaq +0.1%, Dax flat, FTSE100 flat

***FX ranges/Commodities/Fixed Income (00:30ET)***
- EUR 1.0600-1.0620; JPY 114.55-115.20; AUD 0.7475-0.7510; NZD 0.7090-0.7125
- Feb Gold -0.5% at 1,192/oz; Feb Crude Oil +0.1% at $53.05/brl; Mar Copper -0.3% at $2.66/lb
- (AU) Australia Finance Ministry (AOFM) sells A$600M in 1.75% 2020 bonds; avg yield 2.052%; bid-to-cover 5.35x
- USD/CNY: (CN) PBOC SETS YUAN MID POINT AT 6.8909 V 6.9141 PRIOR; 2nd straight firmer setting
- (CN) PBOC to inject combined CNY70B in 7-day and 28-day reverse repos v CNY110B prior; Injects net CNY100B this week v drained CNY595B prior

***Asia equities / Notables / movers by sector***
- Consumer staples: Bellamy's Australia BAL.AU -7.5% (momentum)
- Financials: Seven & I Holdings 3382.JP +8.8% (Q3 result); BT Investment Management BTT.AU -2.1% (Dec result); China Galaxy Securities Co 6881.HK +0.4%, China Resources Land 1109.HK +0.6% (Dec result); China Vanke Co 000002.CN +7.1%, 2202.HK +5.6% (China Resources sell stake); Seibu Holdings 9024.JP -4.8% (Cerberus sells voting rights stake)
- Industrials: Great Wall Motor 2333.HK +3.0% (prelim FY16 result); Takata Corp 7312.JP +16.5% (settlement speculation)
- Technology: Nintendo Co. 7974.JP -1.8% (game banned in China, to launch new platform); Samsung Electronics 005930.KR -3.3% (group exec Lee questioned); Taiwan Semiconductor Manufacturing Co 2330.TW -1.6% (guidance)
- Materials: Citic Resources 1205.HK +2.9% (profit alert); Yunnan Chihong Zinc & Germanium Co 600497.CN -2.5% (prelim result); Western Areas WSA.AU -17.8%, Sumitomo Metal Mining 5713.JP -5.1%, Independence Group IGO.AU -9.3% (Indonesia allows some exports of nickel ore, bauxite); Whitehaven Coal WHC.AU +3.0% (CLSA raised to outperform)
- Energy: Sinopec 386.HK +3.6% (Credit Suisse upgrades)

>>> US Close Dow -0.32% S&P -0.21% Nasdaq -0.29% Russell -0.89%

Closing Market Summary: Stock Market Closes Thursday Modestly Lower

Equity indices finished Thursday's session lower amid a cautious tone on all fronts. The Dow led the retreat with a loss of 0.3%, while the benchmark S&P 500 index (-0.2%) registered a slimmer loss.

The risk-off trade began with heavy selling pressure that pushed the stock market into negative territory at the opening bell. The U.S. dollar followed suit, while the Treasury market benefited from the defensive posturing. The stock market did eventually tick up, but ended the day after trending sideways at its eventual closing level all afternoon. Since President-elect Donald Trump was short on detail regarding his policy proposals at yesterday's news conference, the downside bias may have had something to do with misgivings about the actual policies living up to the pre-inauguration hype.

Financials led today's retreat, closing lower by 0.7%. The sector also sits in the red for the week (-0.7%), but will have an opportunity to change that tomorrow as a batch of banks will be reporting their quarterly results before the opening bell, including JPMorgan Chase (JPM 86.24, -0.84), Wells Fargo (WFC 54.50, -0.30), and Bank of America (BAC 22.92, -0.15). The three names surrendered between 0.6% and 1.0% on Thursday.

The technology sector (-0.3%) fared only slightly better, thanks in part to tumbling chipmakers who dragged the PHLX Semiconductor Index down 0.9%. The four remaining cyclical sectors also finished in the red with energy sliding 0.5% despite crude oil's positive performance. The commodity finished its trading day higher for the second session in a row, up 1.4% at $53.03/bbl.

On the countercyclical side, four out of five sectors finished in the green, including health care (+0.1%). The space received a boost from the biotech industry, evidenced by the 0.4% increase in the iShares Nasdaq Biotechnology ETF (IBB 279.04, +1.19). Biotechnology's gain came after the ETF tumbled 3.0% yesterday after Mr. Trump expressed a desire to bring back pharmaceutical operations to the United States and voiced support for competitive drug price bidding. Telecom services (+0.6%) finished at the top of leaderboard, while real estate (+0.4%), and utilities (+0.1%) also finished in positive territory.

In corporate news, Fiat Chrysler (FCAU 9.95, -1.14) ended lower by 10.3% after the Environmental Protection Agency accused the automaker of violating the Clean Air Act by installing and failing to disclose "engine management software in light-duty model year 2014, 2015, and 2016 Jeep Grand Cherokees and Dodge Ram 1500 trucks with 3.0 liter diesel engines sold in the United States." The accusations are reminiscent of the 2015 Volkswagen case, which resulted in a $4.3 billion settlement with US regulators.

U.S. Treasuries traded with gains for most of today's session but declined following the $12 bln 30-year Treasury auction and closed well off their intraday highs. The 10-yr yield finished lower by two basis points at 2.36%.

Economic data included Import/Export Prices, Initial Claims, and Treasury Budget:

  • Import prices excluding oil declined 0.2% in December after ticking down 0.1% in November. Export prices excluding agriculture increased 0.4% in December after declining 0.1% in November (revised from +0.2%).
    • The Import/Export Price Index report for December fit within the scope of the reflation trade that has been driving the stock market.
  • The latest weekly initial jobless claims count totaled 247,000 while the consensus expected a reading of 255,000. Today's tally was above the revised prior week count of 237,000 (from 235,000). As for continuing claims, they declined to 2.087 million from the revised count of 2.116 million (from 2.112 million).
    • The latest initial claims report won't diminish any confidence in the state of the labor market, which continues to be solid. Initial jobless claims held below 300,000 for the 97th straight week -- the longest streak since 1970.
  • The Treasury Budget for December showed a deficit of $27.5 billion versus a deficit of $14.4 billion for December 2015.
    • The Treasury Budget data is not seasonally adjusted, so the December deficit cannot be compared to the $136.7 billion deficit registered in November.

Tomorrow's economic data will include December PPI and Retail Sales at 8:30 am ET while November Business Inventories and the Michigan Sentiment Index will cross the wires at 10:00 am ET.

  • Russell 2000 +0.3% YTD
  • Dow Jones Industrial Average +0.7% YTD
  • S&P 500 +1.4% YTD
  • Nasdaq Composite +3.1% YTD

>>> Zodiac Aerospace should be open to strategic opportunities and address gover

Zodiac Aerospace should be open to strategic opportunities and address governance issues – CIAM

Zodiac Aerospace [EPA:ZC] should undertake a strategic review and be open-minded about all opportunities in its rapidly consolidating sector, according to activist Charity Investment Asset Management (CIAM) partner Anne-Sophie D’Andlau.
The company should be looking at different opportunities via a review given its poor performance over the past two years, she said. The company has warned on profits nine times in that period, and is underperforming its peers, she said.
The sector is consolidating at the moment, so the board needs to be aware of all the possibilities and be open-minded to follow them, D’Andlau said, adding: “We don’t know whether they are open to that right now or not.”
The French activist went public this week with a campaign targeting a “yellow card” protest vote at next week’s 19 January AGM against Zodiac’s non-independent directors aligned with family shareholders, who hold 36.6% of Zodiac’s voting rights. CIAM has a stake of “a little below 1%”, it said.
CIAM is actively encouraging Zodiac’s shareholders to vote against the renewal of two directors and appointment of a new director, all of whom are connected to the families, D’Andlau said. A vote in favour of these directors would mean only five truly independent board members out of 12, she said.
Rumours of a potential sale of Zodiac persisted throughout 2016, with France’s Safran [EPA:SAF] and United Technologies [NYSE:UTX] of the US rumoured as a potential acquirers, particularly after Rockwell Collins [NYSE:COL] and Zodiac’s main competitor B/E Aerospace [NASDAQ:BEAV] decided to merge.
Cross-border M&A generally could benefit under a Trump administration, so US defence companies looking for uplift would look at the likes of Zodiac, a sector banker said.
There is also a dearth of smaller and mid-sized defence companies available for acquisition in the US, where consolidation has been more prominent than in Europe, he said.
The banker put Meggitt [LON:MGGT] and Cobham [LON:COB] in the same boat, saying the UK and European defence sector is a “disaster”.
Zodiac had lost 16.1% of its value over the two years to 20 December, according to figures collated by CIAM from Bloomberg. Safran was up 41.9% and Thales [EPA:HO] up 109.9% over the same period, while Meggitt and Rolls-Royce [LON:RR] were in negative territory, down 2% and 18.9% respectively.
Meggitt has attracted the attention of US activist Elliott Management, while ValueAct Capital partner Bradley Singer is now a board member at Rolls-Royce, as reported.
CIAM believes Zodiac’s poor performance could be mitigated by more aerospace sector experience on the board, D’Andlau said.
A substantial “against” vote at this year’s AGM would be like sending a “yellow card”, she said, adding that next year it could be a “red card”.
That could mean non-family shareholders putting forward a new board member at next year’s AGM, “or some other options that I won’t go into now”, she said.
CIAM, largely via proxy solicitor Georgeson, is urging shareholders to vote against six resolutions in total, and hopes to see at least an increase to the protest vote at last year’s AGM, as reported.
At 2016’s AGM, 19.39% and 20.23% voted against the renewal of Didier and Elisabeth Domange respectively, while in 2015, 21.94% voted against the renewal of Gilberte Lombard, who is once again up for renewal.
The activist has recommended shareholders vote against the appointment of a representative of Fidoma, a company linked to the family shareholders, as a new member of the supervisory board; and against the renewal of Vincent Gerondeau and Lombard’s terms on the board.
It has also recommended to vote against three resolutions relating to performance shares granted to three Zodiac executives.
The AGM will take place at 4pm CET on 19 January at Le Port-Marly near Paris.
Zodiac did not respond to a request for comment.

Barron's : Icahn Hedge Fund Loses 20% of Its Value in 2016

Icahn Hedge Fund Loses 20% of Its Value in 2016
A nearly $6 billion hedge fund run by billionaire Carl Icahn continues to suffer after tumbling 18% in 2015.

Billionaire Carl Icahn is coming off another poor investment year as a nearly $6 billion hedge fund that he oversees suffered a loss of 20.3% in 2016 after a decline of 18% in 2015, according to a disclosure in a regulatory filing in conjunction with a bond deal and rights offering being made by Icahn Enterprises (ticker: IEP), a publicly traded limited partnership that is controlled by Icahn.

The weak 2016 performance reflected Icahn’s bearish stance as the fund had a sizable short position in the U.S. equity market that hurt results as the S&P 500 index gained almost 10% last year. The Icahn fund had a net short position of 138% at the end of the third quarter—fourth quarter positioning has not yet been disclosed.

It’s ironic that Icahn, one of the Wall Street’s prominent supporters of president-elect Donald Trump, failed to capitalize on the postelection market rally in stocks. Icahn said on the day after the election that he bought “a lot of stock” the prior night in the market selloff that immediately followed Trump’s surprise win. But those purchases may have simply reduced his investment fund’s net short position. The fund appears to have been down about 8% in the fourth quarter. It was off 12.7% through the first three quarters of 2016, according to a regulatory filing. Icahn remains close with Trump, who named the 80-year-old investor as a special advisor on regulatory overhaul last month (see “Carl Icahn Stands to Gain,” Dec. 24, 2016).

Among the few notable investors with a similarly bad performance to Icahn’s in the past two years is another billionaire, Bill Ackman, who has tangled publicly with Icahn over Herbalife (HLF), the controversial nutritional company that Ackman has likened to a pyramid scheme because of its sales practices. Icahn is the largest holder of Herbalife with a nearly 25% stake. Ackman’s publicly traded offshore closed-end fund, Pershing Square Holdings (PSHZF), was off 13.5% in 2016 after a 20.5% loss in 2015 based on its net asset value. Ackman had a much better 2014, gaining 40.4% while Icahn’s fund lost 7.4%.

Icahn Enterprises held a $1.8 billion stake in the Icahn investment fund; Icahn personally owns $4.1 billion stake through various entities. The fund returned money to outside investors in 2011. Among the fund’s largest holdings at the end of the third quarter were American International Group (AIG), Cheniere Energy (LNG), PayPay Holdings (PYPL), and Herbalife. Icahn sold the fund’s big position in Apple (AAPL) last year after a sizable gain.

Icahn Enterprises, a diversified holding company, also owns large stakes in CVR Energy (CVI), a Midwest oil refiner, and Federal-Mogul, an auto-parts company that Icahn is trying to fully purchase in a deal that has been opposed by some minority holders. Icahn owns a 90% stake in Icahn Enterprises.

The company is in the process of selling a large bond offering and making an equity rights offering in order to pay off nearly $1.2 billion of maturing public debt. The two-part bond deal, initially sized at $900 million, may be increased to around $1.2 billion. The five-year notes could be priced later today with a yield of about 6.25% and the seven-year notes at around 6.75% according to market speculation this morning.

The notes are being sold to qualified institutional investors and aren’t being registered. The Icahn Enterprises junk bond deal looks appealing, investors tell Barron’s, because the yields are above that of the overall market, which averages under 6% now. The ratings of Ba3 from Moody’s and BB+ from Standard & Poor’s are higher than the average junk rating. Investors say there is significant asset coverage of more than two to one and buyers can take comfort that they are senior to Icahn, whose equity stake in the company is worth about $7.5 billion. Buyers of the bond deal argue that Icahn wouldn’t jeopardize his equity stake, probably his single largest asset, by making rash investments.

While the Icahn Enterprises bonds look attractive, the company’s publicly traded units (the term for partnership equity) appear overvalued trading around $61, down fractionally today. As part of the disclosure for the bond and rights offering, Icahn Enterprises disclosed a preliminary year-end 2016 indicative net asset value of almost $5.1 billion, or about $36 a unit, based on our calculation using the third-quarter units outstanding of 139 million.


The units trade a big premium to their net asset value, reflecting perhaps a high yield of about 10%. Icahn, it should be said, takes his distributions largely or entirely in additional equity, minimizing the cash outlay for the company.

Investors will be interested to see the terms of the $600 million rights offering, which will give holders the right to purchase a newly issued unit at a price to be determined. Icahn apparently plans to backstop the deal by purchasing all rights granted to him and to those of minority holders who don’t participate. Rights offerings often are set below the market price to entice investors to participate. It’ll be interesting to see where the price is set with the units trading so far above NAV.

Icahn Enterprises may emerge from these transactions with $2 billion of cash, which should allow Icahn to take new activist equity positions or potentially buy entire companies.

(GS): Top 25 Tactical Trades for the Earnings Season

Volatility, Correlation decline; we focus on TMT, IndustrialsLast quarter, S&P 500 realized correlation dropped to 16%, its lowest level in 10 years and less than half the 15-year average.
Stock picking

strategies focused on earnings revisions (i.e. the topic of this report) had their best performance in years. That high dispersion has driven high turnover in our list; 23 of our 25 names are new this quarter.

 

Stocks are increasingly making big moves on earnings relative to other days. S&P 500 stocks moved +/-4.0% on earnings day last quarter, 3.5x their average daily move (near a 20-year high).

 

Call buying for earnings was broadly profitable on S&P 500 companies for the 21st year in a row in 2016. We estimate buying calls on all S&P 500

stocks averaged a +13% return on premium last quarter (6-day holding period around each earnings day), in line with the 20-year average.

 

TMT, Industrials make up over half the opportunities on our list: While macro shifts drove sector dispersion last quarter, our conversations

with analysts reveal there are more names in the TMT and Industrials sectors with idiosyncratic fundamental drivers such as new products, restructuring and business innovation.

J'ai/actelion: Deal Said Valued at $250-$260 Per Share, Including SpinCo

Johnson & Johnson (JNJ), Actelion (ALIOY) Deal Said Valued at $250-$260 Per Share, Including SpinCo - Sources

January 12, 2017 12:38 pm

Johnson & Johnson (NYSE: JNJ) and Actelion (OTC: ALIOY) are making progress toward finalizing 2017's first mega-deal, valued in the tens of billions of dollars, according to people claiming to have knowledge of the matter.

Under the arrangement being discussed, Actelion would split into two parts, with mature assets acquired by Johnson & Johnson, and the other assets held in a second public company. The amount of the cash component remains an open question but the total deal value is believed to be $250 to $260 per share, including the SpinCo. One person said Actelion investors would likely have the option to take all cash or shares in the new company.

Actelion and Johnson & Johnson in December announced that they entered exclusive talks, an arrangement that excluded Sanofi (NYSE: SNY), a drug company that had also shown interest in a deal with Actelion. While Sanofi is no longer involving in talks, the fact that there was a second bidder stirred rumors that Johnson & Johnson had sweetened its offer by a large sum, but the deal's structure may have played as large of a role as price and been the critical factor in allowing the process to move forward. Actelion's CEO Jean-Paul Clozel, a large shareholder, had pressed for the company's independence from the beginning.

While the terms of the new, complex arrangement may not include a major bump in price, it was described as a win for all parties involved -- Johnson & Johnson, Actelion, and shareholders.

FT : Covenant clause removal fires up US bond investors

Covenant clause removal fires up US bond investors
Orders surpass $25bn for Broadcom’s $13.55bn offer, the year’s largest corporate bond

US fixed income investors drew a line in the sand this week, forcing a number of companies to back away from weakening the terms of their debt sales at the expense of bondholders.

General Motors’ financial subsidiary, chipmaker Broadcom and the Brazilian pulp manufacturer Fibria Celulose dropped contentious language from their debt sales that sought to deprive investors of certain premiums should the companies breach their covenants and default.

The investor opposition, which one money manager characterised as a “groundswell”, also prompted Novolex — a maker of packaging products that private equity firm Carlyle is buying — to retreat from weakening its covenants.

“There is still power for the [bond] buyers,” said Matthew Brill, a portfolio manager with Invesco. This was “the start of a slippery slope. We said we had to hold the line.”

Bondholders are typically paid a premium if a company decides to pay off its debts before they are due.

The compensation, known as ‘make-whole’ redemptions, offset missed earnings when a bond is retired before initially agreed.

The make-whole provisions extend to breaches of covenants, which can occur if a group pays a dividend in excess to the bond document terms or if its debt eclipses agreed levels, triggering a technical default.

As the rebellion gathered momentum, there was concern among investors that they would simply miss out on deals if they sought to negotiate with underwriters on the language, which often reads: “No premium in respect of the notes shall be payable as a result of any default.”

The no-premium language first popped up in a corporate bond sale last October and has since featured in about a dozen deals.

Gautam Khanna, a portfolio manager with Insight Investment, noted that sharp inflows into US corporate credit had weakened investors’ hands.

“Often a deal is announced, particularly in the investment-grade space, and it is five-times oversubscribed in the first few hours and it gets done,” he said. “There's not much of an opportunity to push back on the covenant package.”

Insurance broker Marsh & McLennan, which successfully sold $1bn worth of debt earlier this week with the clause, amended its bond documents with US securities regulators on Wednesday to remove the language. 

After Broadcom removed the clause, underwriters counted orders in excess of $25bn for the $13.55bn offering — the year’s largest corporate issue so far and one of a handful of $10bn-plus acquisition-related bond sales expected in 2017. 

The sale, which was completed shortly after GM Financial’s $2.5bn debt was issued, came amid a wave of bond offerings that started the year on a record pace. 

“So far issuance has been extremely robust this month and we haven’t even gotten to earnings season, when most of the US banks will come,” said Andrew Forsyth, a portfolio manager with BNP Paribas Investment Partners who purchased some of the new seven-year Broadcom notes.

“There is a little bit of fatigue in the investment-grade market.”