Morning Commentary: Post-holiday high-grade supply strong; Exxon, GE, Walgreens on deck

By Cristal Cody

Tupelo, Miss., April 13 – Strong pricing action is expected in the high-grade bond market on Monday and over the week following the long Easter holiday weekend, sources report.

Exxon Mobil Corp., which priced $8.5 billion of senior notes (Aaa/AA) on March 17, is returning to the primary market on Monday with five tranches of notes, including add-ons to two of the tranches priced last month.

The company is marketing new three-year notes with initial talk in the Treasuries plus 155 basis points area, long 10-year notes talked at the 210 bps area and 31-year notes with initial guidance in the 220 bps spread area.

Exxon Mobil also intends to reopen its 2.992% notes due March 19, 2025 and its 4.227% notes due March 19, 2040. The five-year notes are talked at the 165 bps spread area, and the 20-year tranche is talked at the Treasuries plus 220 bps area.

Also on Monday, General Electric Co. is offering four tranches of notes (Baa1/BBB) in the primary market.

The deal includes seven-, 10-, 20- and 30-year tranches that are initially talked to price with a spread in the Treasuries plus 375 bps area.

Meanwhile, Walgreens Boots Alliance, Inc. plans to bring a two-part offering of notes (Baa2/BBB-) to the market during the session.

Initial price talk on a 10-year issue is in the Treasuries plus 287.5 bps area, and a 30-year tranche is talked to print in the 300 bps over Treasuries area.

A two-part deal from Essential Utilities, Inc. also is being offered during the session.

The company’s 10- and 30-year senior notes (Baa2/A-) are talked to price in the Treasuries plus 237.5 bps area.

In addition, on Monday, McCormick & Co., Inc. plans to tap the primary market with new 10-year senior notes (Baa2/BBB) that are talked to price at the Treasuries plus 225 bps area.

Advance Auto Parts, Inc. expects to price $500 million of 10-year notes (Baa2/BBB-) with initial guidance in the Treasuries plus 337.5 bps area.

Also, Massachusetts Mutual Life Insurance Co. intends to price $500 million of new 30-year notes (A2/AA-) on Monday. Initial talk is in the Treasuries plus 237.5 bps area.

About $25 billion to as much as $50 billion of deal volume is expected this week following the Federal Reserve’s additional coronavirus-related economic stimulus announcements released on Thursday. The Fed is expanding its primary and secondary market corporate credit facilities.

Market tone was mostly soft at the open early Monday.

The iShares iBoxx Investment Grade Corporate Bond ETF declined 1.37%.

The Pimco Investment Grade Corporate Bond Index ETF edged up 0.33%.

Stock indices were all weaker. The Dow Jones industrial average was down 2.41% by late morning.

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