Florida Power, Southwest Air, Reliance Steel in primary; supply steady; spreads soften

By Cristal Cody

Tupelo, Miss., July 28 – High-grade supply included bond deals from Florida Power & Light Co., Southwest Airlines Co. and Reliance Steel & Aluminum Co. on Tuesday following strong volume at the start of the week.

Florida Power & Light priced $1.25 billion of floating-rate notes due July 28, 2023 (A1/A) more than 15 basis points tighter than talk.

Southwest Airlines sold $1 billion of notes (Baa1/BBB/BBB+) in add-ons to two existing tranches of senior notes (Baa1/BBB/BBB+) over the session.

A reopening of the company’s 5.25% notes due May 4, 2025 priced 25 bps better than talk, while an add-on to its 5.125% notes due June 15, 2027 sold 20 bps in from talk.

Reliance Steel & Aluminum priced an upsized $900 million of senior notes (Baa3/BBB/BBB) in two tranches 35 bps to 40 bps better than initial guidance following fixed income investor calls on Monday.

High-grade supply totals more than $19 billion week to date after volume topped $16 billion in the previous session, led by AT&T Inc.’s $11 billion five-part offering of senior global notes (Baa2/BBB/A-).

About $10 billion to $15 billion of investment-grade issuance was expected this week after less than $7 billion of bonds priced last week, according to market sources.

In other action on Tuesday, the Federal Reserve Board announced it will extend its Covid-19 pandemic impact-response lending facilities, including the primary and secondary market corporate credit facilities, to Dec. 31 from Sept. 30. A commercial paper funding facility is set to expire on March 17, 2021.

Coming up on Wednesday, the Federal Reserve will conclude a two-day monetary policy meeting.

Kinder Morgan mixed

High-grade financial market tone was soft over the session.

The Markit CDX North American Investment Grade 33 index eased about 1 bp on the day to a spread of 71.11 bps.

The iShares iBoxx Investment Grade Corporate Bond ETF declined 14 cents to head out at 137.56.

The Pimco Investment Grade Corporate Bond index fell 46 cents to 116.4.

In the secondary market, Kinder Morgan, Inc.’s $1.25 billion two-tranche offering of senior notes (Baa2/BBB/BBB) priced on Monday was mixed, a source said.

The company’s $750 million tranche of 2% notes due Feb. 15, 2031 were quoted about 1 bp tighter.

The notes priced at a spread of Treasuries plus 150 bps.

Kinder Morgan’s $500 million tranche of 3.25% notes due Aug. 1, 2050, priced at a spread of Treasuries plus 210 bps, were trading wrapped around issuance.

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