Morning Commentary: High-grade issuers return; Union Pacific, Fifth Third Bank on tap

By Cristal Cody

Tupelo, Miss., Jan. 28 – Investment-grade bond supply roared back to life early Tuesday after issuers skipped the primary market on Monday.

Union Pacific Corp. is offering four tranches of registered senior notes (Baa1/A-), a source said.

The deal includes notes due Feb. 5, 2027 with initial talk in the Treasures plus 80 basis points to 85 bps area and notes due Feb. 5, 2030 that are initially talked to print in the 95 bps to 100 bps area.

Union Pacific also expects to price notes due Feb. 5, 2050 with initial guidance in the 130 bps to 135 bps spread area and notes due Feb. 5, 2070 that are initially talked to print in the 185 bps spread area.

Also on Tuesday, Fifth Third Bank plans to price two tranches of dollar-denominated fixed-rate notes (A3/A-/A-), according to a market source.

A tranche of notes due Jan. 30, 2023 is initially talked to price with a spread in the Treasuries plus 55 bps area.

Initial price talk on the offering of notes due Feb. 1, 2027 is in the 90 bps over Treasuries area.

In other bank supply being offered, Huntington National Bank (A3/A-/A-) is marketing three-year senior notes on Tuesday, according to an informed source.

Initial guidance is in the Treasuries plus 55 bps area.

In addition, Huntington National Bank parent company Huntington Bancshares Inc. is offering registered 10-year notes with initial price talk in the 112.5 bps spread area.

In other supply expected, Nevada Power Co. plans to sell two tranches of registered general and refunding mortgage notes (A2/A+/A-) on Tuesday, a source said.

The deal includes notes due May 1, 2030 with initial talk at the 95 bps to 100 bps spread area and a tranche of notes due Aug. 1, 2050 that are initially guided at the 115 bps to 120 bps over Treasuries area.

Investment-grade primary supply stayed quiet over Monday’s session.

Front-loaded issuance before the Federal Reserve releases its monetary policy decision on Wednesday was expected by market sources. The Federal Open Market Committee starts its two-day meeting on Tuesday.

No rate changes are anticipated during the January meeting, sources report.

About $20 billion to $25 billion of high-grade volume is forecast for the week, according to syndicate sources.

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