Primary quiets; busy post-holiday high-grade supply forecast; Federal Realty, Lowe’s tighten

By Cristal Cody

Tupelo, Miss., Oct. 9 – The high-grade primary market stayed quiet over Friday’s session ahead of the long Columbus Day holiday holiday weekend following a week of issuance that surpassed deal forecasts.

Investment-grade issuers sold more than $23 billion of corporate and sovereign, supranational and agency bonds this week, compared to expectations of about $15 billion to $20 billion of new volume.

Next week, syndicate sources said they expect steady supply in the primary market despite a holiday-shortened week. About $15 billion to $20 billion of volume is anticipated with the potential for $30 billion-plus if banks return to the market after posting earnings results, sources said.

Quarterly earnings reports are due from the major banks next week, starting with JPMorgan Chase & Co. and Citigroup Inc. on Tuesday.

High-grade credit spreads headed out on Friday about 5 basis points tighter from a week ago.

The Markit CDX North American Investment Grade 35 index firmed more than 1.3 bps on the day to close at a spread of 53.46 bps.

Market tone was improved over the session with the PIMCO Investment Grade Corporate Bond index up 0.37% at 115.20 and the iShares iBoxx Investment Grade Corporate Bond ETF 0.23% better at 134.93 at the close.

New issues improve

In the secondary market, new high-grade corporate issues are trading mostly better this week, sources report.

Federal Realty Investment Trust’s 1.25% green notes due Feb. 15, 2026 (A3/A-/) priced on Thursday tightened to 97 bps bid, a market source said.

Federal Realty sold $400 million of the notes at 99.339 to yield 1.379%, or a spread of Treasuries plus 105 bps.

The notes priced tighter than guidance at the 115 bps spread area, plus or minus 5 bps, and better than initial talk at the Treasuries plus 140 bps area.

Lowe's Cos., Inc.’s $4 billion of notes (Baa1/BBB+/) brought to the market in three tranches on Wednesday firmed about 3 bps to 7 bps on the long end.

The $1.75 billion tranche of 3% bonds due Oct. 15, 2050 tightened to 133 bps bid, a source said.

Lowe’s priced the notes at a spread of Treasuries plus 140 bps, or 99.902 to yield 3.005%.

Initial price talk was in the 180 bps over Treasuries area with guidance at the 145 bps area, plus or minus 5 bps.

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