Morning Commentary: BlackRock plans high-grade bond tap; Gilead, B.A.T., T-Mobile mixed

By Cristal Cody

Tupelo, Miss., Sept. 25 – Investment-grade primary action continued early Friday with at least one issuer marketing bonds, sources report.

BlackRock TCP Capital Corp. plans to price an add-on to its 3.9% senior notes due Aug. 23, 2024 (Baa3/BBB-).

BlackRock last tapped the issue on Nov. 19, 2019 when it priced a $50 million add-on at 99.035 to yield 4.125%, or a spread of 250 basis points over Treasuries.

The issue originally priced in a $150 million offering on Aug. 16, 2019 at 98.757 to yield 4.178% and a spread of 275 bps over Treasuries. The total outstanding is $200 million.

In other activity, Marathon Petroleum Corp. is holding a virtual roadshow and fixed income investor calls that began on Tuesday.

Early Friday, the company announced the redemption of all $650 million outstanding of its 3.4% senior notes due Dec. 15, 2020 and all $300 million outstanding of its 6.25% senior notes due Oct. 15, 2022.

Corporate bond supply totals more than $34 billion week to date following over $18 billion of issuance on Wednesday and more than $15 billion of deal volume on Tuesday. The investment-grade primary market stayed quiet on Monday, while issuance was thin on Thursday.

About $30 billion to $35 billion of investment-grade issuance was expected for the week.

Bonds soften

New issues are mixed in the secondary market as tone softened and credit spreads widened over the week, a source said.

Gilead Sciences Inc.’s $7.25 billion of senior notes (A3/A) that priced in seven tranches on Wednesday were mostly softer with the short-dated tranches seen better than issuance.

The company’s 1.65% notes due Oct. 1, 2030 were quoted 5 bps wider at 105 bps bid.

Gilead Sciences sold $1 billion of the notes at a spread of 100 bps over Treasuries.

Initial price talk was in the 125 bps spread area.

The $6.25 billion of guaranteed senior notes (Baa2/BBB+) that British American Tobacco plc units priced in five tranches on Tuesday were mixed.

B.A.T Capital Corp.’s 2.726% notes due March 25, 2031 softened to 208 bps bid.

The company sold $1.25 billion of the notes at a spread of Treasuries plus 205 bps, compared to talk in the 230 bps spread area.

T-Mobile U.S. Inc. subsidiary T-Mobile USA, Inc.’s $4 billion Rule 144A and Regulation S offering of senior secured notes (Baa3/BBB-/BBB-) sold in four tranches on Tuesday also were mixed.

T-Mobile’s 2.55% notes due Feb. 15, 2031 eased to 143 bps bid.

The company priced a $750 million tap of the 2.55% notes at a Treasuries plus 140 bps spread.

Price guidance was in the Treasuries plus 165 bps area.

T-Mobile originally priced $1.75 billion of the notes on June 18 at a Treasuries plus 187.5 bps spread. The total outstanding is now $2.5 billion.

Secondary market volume was stronger mid-week, Trace data shows. On Thursday, $21.82 billion of high-grade corporate issues were traded, compared to $21.91 billion on Wednesday, $17.94 billion on Tuesday and $15.34 billion on Monday.

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