High-grade notes print mostly tight amid heavy pace; busy supply forecast to continue

By Cristal Cody

Tupelo, Miss., Sept. 9 – Investment-grade corporate bond issuers took full advantage of the short post-Labor Day week and priced the second highest volume of all time just in one session alone.

High-grade volume hit more than $50 billion in just three sessions on Tuesday, Wednesday and Thursday with issuers pricing more than $35 billion of notes in 44 tranches just on Tuesday, sources reported.

Heavy issuance was expected and came in line with market forecasts of about $40 billion to $60 billion of investment-grade bond volume for the short week.

About $150 billion of high-grade corporate deals are anticipated over the entire month.

Looking ahead, economic data releases, including the latest Consumer Price Index, are expected to impact deal windows with volume likely to be strong at the start of the next week, sources said.

About $30 billion to $40 billion of issuance is being eyed to hit the primary market in the week ahead, according to market sources.

Secondary mixed

This week’s issues came mostly stronger than talk but were mixed in the secondary market with several deals trading wider early in the week and paper priced late in the week mostly tighter, market sources said.

Dollar General Corp.’s $2.3 billion four-part offering of senior notes (Baa2/BBB) came 25 basis points to 30 bps tighter than talk and firmed more than 1 bp in the secondary market, sources said.

Lowe’s Cos. Inc.’s $4.75 billion of notes (Baa1/BBB+) sold in four tranches on Tuesday also printed 25 bps to 30 bps better than initial guidance.

Walmart Inc., too, saw its $5 billion of notes (Aa2/AA/AA) in four tranches on Tuesday price 25 bps to 30 bps stronger than talk.

Paper from Lowe’s and Walmart was mixed in secondary trading, a source said.

Lowe’s 5% notes due 2033 were trading Friday near issuance at 99.772 to yield 5.027% on $59 million of volume, a source said.

Lowe’s sold $1.25 billion of the notes at 99.748 to yield 5.03%, or a 175 bps spread over Treasuries and tighter than talk at the 195 bps area.

Dollar General’s 5% notes due 2032 were trading stronger on Friday at 100.375 to yield 4.951% on $45 million of volume.

The retailer sold $700 million of the notes at 99.645 to yield 5.043%, or Treasuries plus 170 bps. Talk was at the 200 bps area.

Most of the deals in the primary market on Wednesday also came about 25 bps to 30 bps better than talk, including from Bank of Montreal, JPMorgan Chase & Co. and Mizuho Financial Group Inc., according to a market source.

One of the week’s few exceptions was a $1.25 billion two-part offering of notes (Baa2/BBB) from Stellantis Finance US Inc. on Wednesday that priced wrapped around initial talk, according to a market source.

Tone held up on Thursday with the day’s offerings all coming to market stronger than talk, a source said.

Toronto-Dominion Bank priced its $3 billion of notes (A1/AA-) in two tranches on Thursday 20 bps tighter than initial guidance.

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