Morning Commentary: SSA space active; Nordic Investment Bank, Kommunalbanken on deck

By Cristal Cody

Tupelo, Miss., Sept. 3 – Light supply is expected in the investment-grade primary market on Thursday with few issuers offering bonds, sources report.

In the sovereign, supranational and agency space, Nordic Investment Bank plans to price dollar-denominated five-year global notes (Aaa/AAA) over the day.

Initial price talk is in the mid-swaps plus 11 basis points area.

Also, Kommunalbanken Norway (Aaa/AAA) is marketing dollar five-year global notes during the session.

In corporate supply, market participants are looking toward an expected deal soon from Johnson Controls International plc, which concluded two days of fixed income investor calls on Wednesday for dollar-denominated 10-year green senior notes (Baa2/BBB+/BBB) and a potential euro-denominated note.

Also, Suzano Austria GmbH is in the deal pipeline with a registered offering of dollar-denominated global notes due in 2031 (BBB-/BBB-).

Meanwhile, Independent Bank Group, Inc. is holding fixed income investor calls for a possible offering of notes (Kroll: BBB+).

High-grade corporate deal volume totals about $4 billion week to date.

Supply has been led by Mizuho Financial Group, Inc.’s $2 billion of senior notes (A1/A-) that priced in three tranches on Tuesday.

SSA issuance this week so far has included European Stability Mechanism’s $3 billion of five-year senior notes and a $3.5 billion three-year issue from Freddie Mac, both priced on Wednesday.

Market action was expected to wane ahead of the Labor Day holiday with only about $5 billion to up to $15 billion of supply forecast.

In the secondary market, trading volume was the strongest at the start of the week, Trace data shows. On Wednesday, $18.55 billion of investment-grade bonds were traded, compared to $18.27 billion on Tuesday and $21.35 billion on Monday.

Market tone softened over the morning.

The iShares iBoxx Investment Grade Corporate Bond ETF slipped a dime to 136.60.

The Pimco Investment Grade Corporate Bond index was mostly flat at 116.01.

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