Morning Commentary: High-grade issuers deluge primary; CVS, Home Depot, Nvidia on tap

By Cristal Cody

Tupelo, Miss., March 26 – Investment-grade bond issuers continue to flood the primary market with heavy supply expected over Thursday’s session, market sources report.

Investment-grade supply already totals more than $62 billion week to date despite the coronavirus-related lockdowns worldwide.

CVS Health Corp. is on deck with four tranches of fixed-rate senior notes that includes seven- and 10-year notes initially talked to price with a spread in the Treasuries plus 350 basis points area, 20-year notes talked in the 340 bps spread area and 30-year notes talked to print with a spread in the 350 bps area.

Home Depot Inc. also is marketing four tranches of senior notes on Thursday. The seven-, 10- and 20-year notes are talked to print in the Treasuries plus 235 bps area, while a 30-year tranche is talked at the 245 bps spread area.

A hefty supply of new financial paper is expected over the session from several issuers, including Goldman Sachs Group Inc., which is offering five-year notes with initial talk at the Treasuries plus 337.5 bps area, Morgan Stanley, which is marketing fixed-to-floating rate notes due 2031 that are talked at the Treasuries plus 312.5 bps area, and Standard Chartered plc, which is marketing 11-year notes that are guided to print at the Treasuries plus 412.5 bps area.

Raymond James Financial, Inc. plans bring a 10-year tranche talked to price at the Treasuries plus 425 bps area after holding fixed income investor calls on Tuesday.

Also, Wells Fargo & Co. intends to bring new 30-year notes to the primary market. The issue is talked to price at the Treasuries plus 280 bps area.

American Financial Group, Inc. is offering $300 million of 10-year senior notes with initial price talk in the Treasuries plus 462.5 bps area.

In addition, State Street Corp. is on deck with three tranches of senior notes. The deal includes three-year notes initially talked to price at the Treasuries plus 325 bps to 337.5 bps area and six- and 11-year year notes talked at the 312.5 bps spread area.

In other supply expected, Weyerhaeuser Co. plans to sell 10-year senior notes that are talked at the Treasuries plus 375 bps area.

Meanwhile, Nvidia Corp. is offering four tranches of senior notes that includes 10-, 20-, 30- and 40-year notes.

Target Corp. intends to bring a two-part offering of five- and 10-year notes to the market. The five-year notes are initially talked to price with a spread in the Treasuries plus 225 bps area, while the 10-year issue is talked at the 235 bps spread area.

AutoZone, Inc. is marketing two tranches of senior notes following a $500 million 10-year note offering on Wednesday from O'Reilly Automotive, Inc.

AutoZone’s tranches are talked to price at the Treasuries plus 360 bps area.

Consolidated Edison Co. of New York, Inc. is in the primary market with two tranches of green bonds. The 10- and 30-year bonds are talked at the 312.5 bps over Treasuries area.

Northwest Natural Gas Co. is offering $150 million of 30-year medium-term notes that are talked to print at the Treasuries plus 250 bps area.

CSX Corp. intends to price a registered offering of 30-year notes.

Also on Thursday, Huntington Ingalls Industries, Inc. is marketing two tranches of senior notes that includes five- and 10- year notes talked at the Treasuries plus 400 bps area.

In addition, the Walt Disney Co., which sold $6 billion of registered medium-term notes (A2/A/A) in five tranches a week ago, is returning to the primary market to price a registered guaranteed Canadian dollar-denominated offering of notes due 2027.

Up to $70 billion of supply was expected by market sources this week.

New issues have mostly tightened significantly from issuance, a market source said.

McDonald’s Corp.’s $3.5 billion of senior medium-term notes (Baa1/BBB+) that priced in four tranches on Wednesday firmed about 25 bps to 33 bps.

The fast food operator’s five-year tranche was the most improved after tightening to the 247 bps bid area.

The company sold $750 million of the 3.3% notes due July 1, 2025 at 99.965 to yield 3.308% and a spread of 280 bps over Treasuries.

Deere & Co.’s $2.25 billion of notes (A2/A/A) sold in three parts in the previous session came in about 35 bps to 38 bps.

The company’s $700 million of 3.1% notes due April 15, 2030 firmed about 35 bps to the 190 bps area.

Deere priced the notes at 99.811 to yield 3.122%, or Treasuries plus 225 bps.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.