High-grade supply quiet; Dollar Tree eases, Dollar General flat ahead of earnings reports

By Cristal Cody

Tupelo, Miss., May 29 – The investment-grade primary market stayed quiet on Wednesday in a risk-off market environment.

Deal volume week to date has been led by MasterCard Inc.’s $2 billion two-part sale of fixed-rate notes on Tuesday. The bond markets were closed on Monday for the Memorial Day holiday.

High-grade companies priced more than $3 billion of notes on Tuesday.

About $10 billion to $15 billion of supply is expected this week, according to syndicate sources.

A dollar-denominated Rule 144A and Regulation S offering of senior notes is in the pipeline from Unibail-Rodamco-Westfield SE, which held fixed income investor calls on Tuesday for the deal.

Market tone was weaker on Wednesday on trade fears with a risk-off mood enveloping the financial markets and sending Treasury yields lower, a source said. The 10-year Treasury yield closed down about 3 basis points at 2.24%.

Stocks weakened on Wednesday across the board with the Dow Jones industrial average down about 152 points, or 0.6%, early Wednesday and ending the day off about 221 points, or 0.87%.

The Markit CDX North American Investment Grade 32 index eased about 1 basis point to end the day at a spread of 67 bps.

In new issue secondary trading, Southwest Gas Corp.’s 4.15% senior notes due June 1, 2049 (A3/BBB+/A) priced on Tuesday improved about 3 bps, a source said.

The Las Vegas-based natural gas distributor sold $300 million of the notes at a spread of 145 bps over Treasuries.

In other secondary trading on Wednesday, International Business Machines Corp.’s 3.5% notes due May 15, 2029 priced as part of a $20 billion eight-tranche offering of notes (A1/A/A) on May 8 traded about 1 bp tighter.

Bristol-Myers Squibb Co.’s 3.4% senior notes due July 26, 2029 recovered during the session after widening on Tuesday. The notes (A2/A+/) were priced May 7 as part of a $19 billion nine-tranche Rule 144A and Regulation S offering.

Meanwhile, Dollar Tree Inc.’s senior notes (Baa3/BBB-/) softened ahead of the release of the company’s first quarter earnings report before the market opens on Thursday.

Dollar General Corp.’s 4.125% senior notes due May 1, 2028 (Baa2/BBB/) were unchanged in secondary trading on the eve of the company’s first quarter earnings release.

IBM improves

International Business Machines’ 3.5% notes due May 15, 2029 firmed about 1 bp on Wednesday to 117 bps bid, according to a market source.

IBM sold $3.25 billion of the 10-year notes (A1/A/A) as part of a $20 billion eight-tranche offering on May 8 at a spread of 105 bps over Treasuries.

The company is an information technology and computer company based in Armonk, N.Y.

Bristol-Myers firms

Bristol-Myers Squibb’s 3.4% senior notes due July 26, 2029 recovered about 4 bps on Wednesday to 99 bps bid after softening 4 bps in the previous session, according to a market source.

Bristol-Myers sold $4 billion of the 10-year notes (A2/A+/) on May 7 at a Treasuries plus 105 bps spread as part of a $19 billion nine-tranche offering.

The biopharmaceutical company is based in New York.

Dollar Tree softens

Dollar Tree’s 4% notes due May 15, 2025 eased more than 1 bp to 151 bps bid, a market source said.

Dollar Tree sold $1 billion of the notes on April 5, 2018 at a Treasuries plus 125 bps spread.

The company’s 4.2% notes due May 15, 2028 widened about 10 bps to 196 bps bid.

Dollar Tree sold $1.25 billion of the 4.2% notes in the April 2018 offering at a spread of 140 bps over Treasuries.

The discount retailer is based in Chesapeake, Va.

Dollar General flat

Dollar General’s 4.125% senior notes due May 1, 2028 (Baa2/BBB/) were unchanged on the day at 142 bps bid, according to a market source.

Dollar General sold $500 million of the notes on March 26, 2018 at a spread of 130 bps over Treasuries.

The discount retailer is based in Goodlettsville, Tenn.

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