Morning Commentary: High-grade primary quiet after Takeda deal; no reported bonds on tap

By Cristal Cody

Tupelo, Miss., Nov. 20 – The investment-grade bond market opened on a quiet note on Tuesday as activity slows ahead of the Thanksgiving Day holiday.

No reported issuers were marketing bonds as desks begin to thin with some market participants taking off early on Wednesday, sources said.

On Monday, Takeda Pharmaceutical Co., Ltd. priced $5.5 billion of senior notes in four tranches, while Wisconsin Public Service Corp. sold $400 million of three-year senior notes and GATX Corp. priced a $100 million reopening of three-year floating-rate notes.

The session was “likely the busiest day for the primary market during this Thanksgiving week,” BofA Merrill Lynch analysts said in a note released on Tuesday.

About $5 billion to $10 billion of investment-grade volume was expected by syndicate sources for the holiday-shortened week. The bond markets will be closed on Thursday and will close at 2 p.m. ET on Friday for the holiday.

Takeda’s dollar-denominated notes followed a six-tranche offering of euro-denominated notes the company priced on Thursday.

The front-end U.S. dollar tranches that included two-, three and five-year notes “offered more yield than the front-end EUR tranches,” according to the BofA Merrill Lynch note.

Takeda’s 10-year dollar notes “came relatively rich compared to the belly EUR tranches on a currency-hedged basis,” the analysts said.

The yield showed that even on a weak day in the U.S. market, “out the curve there is more yield in the EUR corporate bond market than in the U.S. on a currency hedged basis for U.S. investors,” the analysts said.

Looking at the secondary market on Monday, $17.97 billion of investment-grade issues traded, according to Trace.

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