Morning Commentary: Supply quiet in high-grade primary market; Energy Transfer tanks

By Cristal Cody

Tupelo, Miss., Feb. 28 – The investment-grade primary market stayed quiet early Friday with no issuance in sight.

Only three reported issuers have tapped the primary market this week as stocks plunged, credit spreads widened and Treasuries rallied in a risk-off trade on growing fears of a coronavirus pandemic and limited supply chains.

About $25 billion to $30 billion of investment-grade deal volume was expected this week.

Fulton Financial Corp. sold $375 million of fixed-to-floating rate subordinated notes in two tranches on Tuesday.

First Citizens BancShares, Inc. began marketing a $300 million registered offering of fixed-to-floating rate subordinated notes due 2030 on Wednesday.

In the sovereign, supranational and agency market, CPPIB Capital Inc. priced $1 billion of five-year notes on Wednesday and the European Investment Bank sold $1 billion of four-year floating-rate notes on Thursday.

Secondary market volume has been busier with $24.39 billion of high-grade corporate bonds traded on Thursday, compared to $24.45 billion on Wednesday, $23.7 billion on Tuesday and $15.11 billion on Monday, according to Trace data.

Energy Transfer Operating LP’s 3.75% notes due May 15, 2030 (Baa3/BBB-/BBB-) continued to soften in early trading on Friday, a market source said.

The notes were down to 101.27 at the start of the session, compared to where the issue closed on Monday at 106.18.

The notes headed out on Thursday weaker at 101.68 from 103.08 on Wednesday.

The Dallas-based natural gas midstream and intrastate transportation and storage company sold $1.5 billion of the bonds on Jan. 7 at 99.843 to yield 3.769% and a Treasuries plus 255 basis points spread.

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