Market eyes potential bank issuance in week ahead; Deutsche Bank, Japan Bank notes tighten

By Cristal Cody

Tupelo, Miss., July 14 – Corporate bank and financial issuance remains in the forefront following a week of strong primary action and after three major banks reported second quarter earnings on Friday.

Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. beat analysts’ forecasts in their earnings. In the week ahead, Bank of America Corp., Goldman Sachs Group Inc. and Morgan Stanley release profit reports.

Deal action is expected to be strong in the upcoming week with market sources predicting about $25 billion to $30 billion of supply.

In primary action, Alimentation Couche-Tard Inc. announced plans on Friday to sell senior notes (Baa2) in a Rule 144A and Regulation S offering in the U.S. primary market and senior notes in Canada in a private placement.

The multi-tranche deal from the convenience store operator is estimated at $3 billion in U.S. and Canadian dollars, according to Moody’s Investors Service.

New bonds priced during the week traded mostly tighter.

Deutsche Bank AG, New York Branch’s $2.25 billion three-year notes (Baa2/A-) sold in two tranches on Monday traded on Friday about 9 basis points to more than 11 bps better than issuance.

Japan Bank for International Cooperation’s $5 billion of guaranteed senior bonds (A1/A+) that priced on Thursday firmed about 1 bp to 5 bps across the four tranches in the secondary market.

In other secondary trading, Citigroup, Inc.’s paper was mostly flat on the day.

Coach Inc.’s bonds have tightened since the company announced on Tuesday that it completed its acquisition of Kate Spade & Co. Coach’s 4.25% senior notes due 2025 traded nearly 15 bps tighter on Friday.

The Markit CDX North American Investment Grade index firmed about 1 bp to close at a spread of 58 bps on Friday.

Deutsche firms

Deutsche Bank’s 2.7% notes due July 13, 2020 traded on Friday at 106.5 bps bid, 104.5 bps offered, a market source said.

Deutsche Bank sold $1.5 billion of the 2.7% notes on Monday at a spread of 118 bps over Treasuries.

The New York-based banking services company is a subsidiary of Deutsche Bank AG.

Japan Bank improves

Japan Bank for International Cooperation’s 2.125% notes due July 21, 2020 firmed to 53 bps bid, 51 bps offered in secondary trading, according to a market source.

The $1.5 billion tranche priced on Thursday at a spread of Treasuries plus 57.6 bps.

Japan Bank’s 2.875% notes due July 21, 2027 traded at 57 bps bid, 54 bps offered.

The notes were sold in a $1.25 billion tranche in Thursday’s offering at Treasuries plus 62.1 bps.

The financial institution is based in Tokyo.

Citigroup flat

Citigroup’s 4.75% subordinated notes due May 18, 2046 (Baa3/BBB/A-) were unchanged in the secondary market at 159 bps bid, a market source said.

The notes were priced on Feb. 7 in a $750 million add-on at a spread of 173 bps over Treasuries.

Citigroup originally sold $1 billion of the notes on May 11, 2016 at a spread of Treasuries plus 225 bps.

The financial services company is based in New York.

Coach tightens

Coach’s 4.25% notes due 2025 traded about 14 bps tighter at 145 bps bid on Friday, a market source said.

Coach sold $600 million of the notes (Baa2/BBB-/BBB) on Feb. 23, 2015 at a Treasuries plus 225 bps spread.

The luxury leather goods company is based in New York.

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