High-grade supply thin with focus on rate hike; Vodafone launches deal; new issues firm

By Cristal Cody

Tupelo, Miss., Sept. 26 – High-grade primary action slowed on Wednesday with the focus on the Federal Reserve’s monetary policy decision and rate hike.

The Federal Open Market Committee raised rates by 25 basis points.

“Information received since the Federal Open Market Committee met in August indicates that the labor market has continued to strengthen and that economic activity has been rising at a strong rate,” the FOMC said in a release. “In view of realized and expected labor market conditions and inflation, the committee decided to raise the target range for the federal funds rate to 2 to 2¼%.”

In deal action, Vodafone Group plc launched an offering of three tranches of hybrid notes on Wednesday, including up to $1.25 billion of 6.25% dollar-denominated notes.

The offering from the London-based telecommunications company included €500 million of euro-denominated notes and £300 million or more of pound sterling notes.

Otherwise, supply was quiet.

Week to date, high-grade issuers have priced nearly $10 billion of bonds.

About $20 billion to $25 billion of issuance was expected by market sources for the week.

The Markit CDX North American Investment Grade 31 index tightened 2 bps over the day to a spread of 61 bps.

In the secondary market, new issues priced this week are trading mostly tighter.

ING Groep NV’s $3.25 billion of senior notes (Baa1/A-/A+) priced in three tranches on Tuesday firmed about 3 bps.

International Flavors & Fragrances Inc.’s $1.5 billion three-tranche offering of notes brought on Monday traded about 5 bps to 8 bps tighter than issuance.

Elsewhere, bonds were mixed in the secondary market.

General Mills, Inc.’s 4.2% senior notes due April 17, 2028 headed out flat after tightening 6 bps on Tuesday.

New issues improve

ING Groep’s 4.55% notes due Oct. 2, 2028 traded in the 147 bps area in the secondary market, a source said.

The company sold $1.25 billion of the 10-year notes on Tuesday as part of a three-tranche deal at a Treasuries plus 150 bps spread.

ING Groep is a global financial institution based in Amsterdam.

International Flavors & Fragrances’ 5% notes due Sept. 26, 2048 improved to the 178 bps area in secondary trading, a market source said.

The company (Baa3/BBB/) sold $800 million of the bonds on Monday at a spread of 183 bps over Treasuries.

The New York City-based company produces flavors and fragrances for use in products including cosmetics, detergents, household goods, foods and beverages.

General Mills improves

In other secondary trading, General Mills’ 4.2% notes due April 17, 2028 were unchanged after tightening 6 bps to 132 bps bid in the previous session, according to a market source.

The company held its annual shareholders meeting during the previous session and announced a quarterly dividend of 49 cents per share.

The bonds traded at 138 bps bid on Monday.

General Mills sold $1.4 billion of the notes (Baa2/BBB/) on April 3 at a spread of 145 bps over Treasuries as part of a $6.05 billion eight-part deal.

The maker of consumer food products is based in Minneapolis.

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