Morning Commentary: Owl Rock, Japan Bank, VEON, Canada shop bonds; EQT notes eyed

By Cristal Cody

Tupelo, Miss., Jan. 14 – A few issuers marketed investment-grade corporate and sovereign, supranational and agency bond deals over the morning on Tuesday.

Owl Rock Capital Corp. is offering registered fixed-rate notes.

Japan Bank for International Cooperation plans to price registered dollar-denominated guaranteed bonds.

Also, VEON Holdings BV has launched a $300 million Rule 144A and Regulation S tap of its split-rated 4% senior notes due April 9, 2025 (Ba2/BB+/BBB-) on Tuesday.

VEON sold $700 million of the bonds on Oct. 2, 2019 with a 4% coupon and a spread of 257.6 basis points over Treasuries.

The Amsterdam-based company is the second telecommunications services provider in the primary market week to date. On Monday, Deutsche Telekom AG, a Bonn, Germany-based telecommunications company, sold $1.25 billion of senior notes due Jan. 21, 2050.

In SSA volume expected on Tuesday, Canada is offering registered global notes due Jan. 22, 2025. Initial price talk is in the Treasuries plus 8 bps spread area.

In other action during the session, EQT Corp. will complete a two-day round of fixed income investor calls for a two-part registered offering of fixed-rate senior notes.

On Monday, about $4 billion of high-grade corporate bonds priced, led by Royal Bank of Canada’s $1.85 billion two-part offering of three-year medium-term senior notes.

About $30 billion to $35 billion of supply is expected this week, according to syndicate sources.

Market focus is turning toward fourth-quarter results and any potential bond issuance that could follow. On Tuesday, Citigroup Inc. and JPMorgan Chase & Co. reported better-than-expected profit results, while Wells Fargo & Co. reported weaker earnings.

On Wednesday, Bank of America Corp., BB&T Corp., U.S. Bancorp and Goldman Sachs Group Inc. will report earnings results, followed by SunTrust Banks Inc., Bank of New York Mellon Corp. and Morgan Stanley on Thursday.

Only 26 U.S. investment-grade issuers are scheduled to release earnings results over the week, “but they account for 11.5% of the index in terms of bond market value,” BofA Securities, Inc. credit strategist Yuri Seliger said in a research note released Tuesday.

“This is because all six large U.S. banks and brokers are reporting earnings this week,” Seliger said. “The pace then accelerates to 55 issuers for the week of January 20 and the peak 130 issues during the week of January 27. The reporting will shift from mostly financials this week to 55% BBB industrials and 33% HQ industrials by the week of January 27.”

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