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Morning Commentary: Spreads mostly unchanged ahead of expected supply; ComEd, Dominion tighten
By Aleesia Forni
Virginia Beach, Nov. 16 – High-grade bonds were largely unchanged at Monday’s open ahead of what players expect to be between $25 billion to $30 billion of supply for the final full week of November.
The Markit CDX North American Investment Grade 25 index firmed 1 basis point at a spread of 83 bps.
Though one source noted that the market felt somewhat softer early during the session, new issues from Commonwealth Edison Co. and Dominion Gas Holdings, LLC traded better in the secondary.
Commonwealth Edison firms
Commonwealth Edison’s $450 million of 4.35% 30-year first mortgage bonds (A2/A-/A-), which sold at 130 bps over Treasuries on Thursday, were quoted 3 bps better on Monday at 127 bps bid, according to a market source.
The notes priced at 99.222 to yield 4.397%.
BofA Merrill Lynch, Citigroup Global Markets Inc., Wells Fargo Securities, LLC, CIBC World Markets Corp. and RBC Capital Markets, LLC were the lead managers.
Proceeds from the deal will be used to repay outstanding commercial paper obligations and for general corporate purposes.
Commonwealth Edison is a unit of Chicago-based energy provider Exelon Corp.
In other trading, Dominion’s $700 million of 2.8% five-year senior notes traded 2 bps tighter at 113 bps bid, 111 bps offered.
The notes priced at 99.663 to yield 2.873% on Thursday, with a spread of 115 bps over Treasuries, according to an FWP filing with the Securities and Exchange Commission.
Barclays, BofA Merrill Lynch, Morgan Stanley & Co. LLC and RBC Capital Markets were the bookrunners.
Proceeds will be used for general corporate purposes, to repay short-term debt and to repay intercompany debt owed to Dominion.
Dominion Gas is a Richmond, Va.-based natural gas company.
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