Morning Commentary: High-grade supply quiets after heavy start to week; Daimler firms

By Cristal Cody

Tupelo, Miss., Aug. 14 – After investment-grade companies tapped the primary market with more than $21 billion of bonds on Monday and Tuesday, supply quieted early Wednesday.

No reported corporate issuers were marketing bonds at the start of the session.

FHLBank System announced it plans to price new five-year Global bonds on Thursday.

Meanwhile, two issuers are eying possible bond offerings.

Assurant Inc. (Baa3/BBB) on Tuesday completed a two-day round of fixed income investor calls via J.P. Morgan Securities LLC and Wells Fargo Securities LLC.

Also on Tuesday, split-rated issuer Gaming and Leisure Properties, Inc. (Ba1/BB+/BBB-) held fixed income investor calls for a possible deal that would be run off the high-grade desk, sources report.

BofA Securities, Inc., Fifth Third Securities, Inc., JPMorgan and Wells Fargo are the arrangers.

Deal volume has been led this week by Exxon Mobil Corp.’s $7 billion seven-tranche issue of notes on Tuesday.

Investment-grade issuers priced nearly $10 billion of bonds on Tuesday after bringing more than $11 billion of paper to the primary market on Monday.

Supply was predicted to hit the $25 billion to $30 billion area this week with some market sources expecting as much as $40 billion of deal volume.

In the secondary market, Daimler Finance North America LLC’s $4 billion Rule 144A and Regulation S sale of senior notes (A2/A) that priced in four tranches on Monday continue to trade better than issuance, a source said.

Daimler’s notes were seen going out on Tuesday another 2 basis points to 3 bps tighter during the session, a market source said.

The $500 million tranche of 3.1% notes due Aug. 15, 2029 were quoted about 8 bps tighter than issuance at 142 bps bid. The notes priced with a spread of 150 bps over Treasuries.

Investment-grade corporate secondary market volume rose to $19.08 billion on Tuesday from $15.28 billion on Monday, according to Trace data.

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