IG primary slows; Verisk, France’s Air Liquide bring deals; Citi, JPMorgan price fixed-to-floaters

By Rebecca Melvin

New York, Sept. 6 – Investment-grade bonds saw a record week in the primary market. “U.S. IG new issuance continues to dominate with another $20.3 billion priced across 15 deals on Thursday, bringing $74.5 billion across 50 deals in three days, according to Bank of America credit strategists Hans Mikkelsen and Yunyi Zhang in a research note released on Friday.

U.S. financial markets were closed on Monday in observance of the U.S. Labor Day holiday.

“While refinancing trades took a breather after two very busy sessions, coming in at $7.5 billion [on Thursday], a number of banks took the baton and issued $9.5 billion for general corporate purposes,” Mikkelsen and Zhang wrote.

The analysts noted that this week’s new record issuance volume accounts for about 1% of the size of the U.S. IG index, while the previous record – $64.8 billion during the week of Sept. 9, 2013 (including the largest deal on record of $49 billion from Verizon) – accounted for a much higher 1.5% share of the index at that time.

“Hence this week’s issuance is comparatively lighter and more easily digestible into a much larger market,” they said.

On Tuesday, there were as many as 21 deals across IG, including a few emerging markets IG deals, compared to 17 deals that came in a single session in September 2015.

The spike in issuance is being attributed to a rally in debt that had driven down Treasury yields to near record lows in August. The move in Treasuries was in tandem with the sovereign bonds of other countries, as investors worry that slowing growth and the U.S.-China trade conflict will throw key economies into recession. The government debt of many countries has negative yield.

The debt of many corporate issuers this past week sported notably lower yields than their existing bonds. But the relative safety of this asset class still attracts buyers.

After a week in which the likes of Apple Inc., Walt Disney Co., CSX Corp. United Airlines Inc. and Simon Property priced – and were just the tip of the iceberg – Friday’s issuance looked very tame.

Verisk Analytics, Inc. (Baa2/BBB/BBB+) priced a $200 million add on to its 4.125% 10-year senior notes.

The Jersey City, N.J.-based data analytics provider priced the original deal in February and the add on came at a price of 110.904 to yield 2.78% or a spread over Treasuries plus 122 basis points, according to an FWP filing with the Securities and Exchange Commission.

In addition, France’s Air Liquide priced $500 million of 2.25% 10-year notes (A3/A-) to yield 2.362%, and Bell Canada priced C$550 million of 2.9% debentures due Sept. 10, 2029 on Friday at 99.871 to yield 2.915%, according to a company news release.

Other than that there were big banks Citigroup and JPMorgan Chase & Co., which priced fixed-to-floating notes, and Bank of Montreal, which priced $500 million of floating-rate notes. And Pinnacle Financial Partners Inc. priced $300 million 4.125% fixed-to-floating rate subordinated notes due 2029. Those notes pay 4.125% for the first five years until Sept. 15, 2024, and then a floating-rate equal to Libor plus 277.5 bps.

Air Liquide prices

The proceeds of Air Liquide’s notes will be used to refinance a dollar-denominated bond that matures this month. The issuance brings the industrial gases and services company’s debt level to €13.2 billion, with an average maturity of six years.

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