Morning Commentary: ADM, McKesson, Tyco, State Street, Santander, AEP offerings on tap

By Cristal Cody

Tupelo, Miss., Nov. 28 – Heavy high-grade supply was forming early Wednesday with several issuers announcing bond offerings.

Archer-Daniels-Midland Co. is offering two tranches of fixed-rate notes.

McKesson Corp. plans to price three tranches of notes, including one floating-rate tranche.

Tyco Electronics Group SA intends to bring an offering of guaranteed senior floating-rate notes due 2020 to the primary market.

State Street Corp. plans to sell two tranches of fixed-to-floating rate senior notes.

Santander Holdings USA, Inc. is on deck with a two-part offering of fixed- and floating-rate senior notes.

American Electric Power Co., Inc. is marketing a two-tranche fixed-rate senior note deal.

ERP Operating LP also intends to print new fixed-rate notes.

In addition, the European Investment Bank plans to sell $1 billion of global notes due Oct. 8, 2021 on Wednesday, according to a market source.

The notes were initially talked to price at the Secured Overnight Financing Rate plus 32 basis points area.

More than $15 billion of high-grade bonds have priced week to date, including nearly $4 billion of issues sold on Monday and more than $11 billion of notes printed on Tuesday.

About $10 billion to $20 billion of supply was forecast by market sources for the week.

Secondary active

High-grade secondary trading volume also has been strong over the first two sessions of the week, according to Trace data.

On Monday, $21.38 billion of bonds traded, while Tuesday’s session saw $21.41 billion of issues trade.

General Motors Co.’s senior notes (Baa3/BBB/BBB) that priced in September remain among the most actively traded investment-grade issues after the company’s announcement on Monday that it will close seven production plants and lay off up to about 14,000 employees, a source said.

General Motors’ 5% notes due Oct. 1, 2028 improved to 96.14 in early secondary trading on Wednesday. The notes closed off at 94.02 on Tuesday from where the issue last traded on Monday at 95.72.

The Detroit-based automaker sold $750 million of the 10-year notes on Sept. 5 at 99.965 to yield 5.004%, or a spread of 210 bps over Treasuries.

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