Morning Commentary: Southern, Hyundai, CyrusOne, HSBC, International Development eyed

By Cristal Cody

Tupelo, Miss., Sept. 15 – Investment-grade supply is expected to remain strong on Tuesday following more than $12 billion of issuance at the start of the week, according to market sources.

The Southern Co. is marketing two tranches of notes (Baa3/BBB/BBB-) that include fixed-to-fixed reset rate junior subordinated notes due Jan. 15, 2051 talked at the 4.25% area and 40-year junior subordinated notes talked at the 4.375% to 4.5% area on Tuesday.

Hyundai Capital America (Baa1/BBB+) is offering three tranches of fixed-rate notes that includes three-year notes talked to price at the Treasuries plus 140 basis points to 145 bps area, five-year notes talked at the 185 bps spread area and seven-year notes guided at the 220 bps over Treasuries area.

CyrusOne LP and CyrusOne Finance Corp. plan to price $300 million of new split-rated fixed-rate senior notes (Ba1/BBB-/BBB-) on Tuesday. Initial price talk is at the Treasuries plus 190 bps area.

AIG Global Funding is marketing $350 million of five-year senior secured notes (A2/A+) over the day. The notes are talked to print at the 80 bps to 85 bps spread area.

HSBC Holdings plc is offering eight-year fixed-to-floating rate senior notes (A2/A-/A+) on Tuesday. Price guidance is at the Treasuries plus 170 bps to 175 bps area.

UniCredit SpA (Baa2/BBB/BBB-) plans to tap the primary market with six-year senior notes talked to price at the Treasuries plus 260 bps area.

Also in corporate supply, Axos Financial, Inc. is offering 10-year fixed-to-floating rate subordinated notes (Baa3//Kroll: BBB) following fixed income investor calls last week.

SSA volume

Meanwhile on Tuesday, the sovereign, supranational and agency space is expected to see several new issues price.

Caisse d'Amortissement de la Dette Sociale (Aa2//AA) launched $4 billion of five-year senior notes early Tuesday at mid-swaps plus 16 bps.

KfW (Aaa/AAA/AAA) launched $4 billion of three-year global notes over the morning at mid-swaps plus 4 bps.

International Development Association (Aaa/AAA) launched $2 billion of five-year senior sustainability notes early in the day at mid-swaps plus 12 bps.

Also, the European Investment Bank (Aaa/AAA/AAA) launched $1.5 billion of 10-year global notes on Tuesday at mid-swaps plus 16 bps.

In other activity, numerous companies are reportedly holding fixed income investor calls and roadshows for potential and expected issuance.

Delta Air Lines Inc. and SkyMiles IP Ltd. are marketing $4 billion of senior secured notes (Baa1//BBB) in five- and eight-year tranches over the week via deal calls.

About $35 billion to $40 billion of high-grade supply is expected in the primary market this week with issuance front-loaded in the week ahead of the Federal Reserve’s monetary policy decision due on Wednesday.

Supply on Monday was led by Coca-Cola Co.’s $4.1 billion of dollar-denominated senior notes (A1/A+) priced in three tranches. Coca-Cola also sold €2.6 billion of registered euro-denominated fixed-rate senior notes in three tranches on Monday.

Secondary market volume was light over Monday’s session with $16.06 billion of high-grade corporate bonds traded, according to Trace.

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