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Morning Commentary: High-grade supply surpasses weekly forecast; Western Union, KfW offer notes
By Cristal Cody
Tupelo, Miss., June 6 – A couple of investment-grade issuers signaled plans on Wednesday to tap the primary market.
In corporate supply, Western Union Co. and Edwards Lifesciences Corp. are offering notes registered with the Securities and Exchange Commission.
Also on deck, KfW plans to bring a benchmark-sized offering of two-year global notes to the primary market, a source said.
The dollar-denominated notes were initially talked to price with a spread in the mid-swaps minus 2 basis points area.
Issuers have already priced more bonds than expected for the entire week in back-to-back sessions on Monday and Tuesday. High-grade issuers sold more than $25 billion of bonds in the last two sessions.
Supply was led on Tuesday by Union Pacific Corp.’s $6 billion seven-part sale of fixed-rate senior notes.
On Monday, primary action was led by Kraft Heinz Foods Co., John Deere Capital Corp., Hyundai Capital America and Goldman Sachs Bank USA.
Syndicate sources had expected about $25 billion of deal volume for the week.
Looking at the secondary market so far this week, trading volume totaled $18.3 billion on Tuesday and $16.04 billion on Monday, according to Trace data.
New issues are trading mostly better in the secondary market, a source said.
Kraft Heinz Foods’ $3 billion of guaranteed senior notes (Baa3/BBB/BBB-) that priced in three tranches on Monday firmed about 1 bp to 3 bps, according to a market source.
The Chicago-based food company’s $1.6 billion of 4% notes due June 15, 2023, which priced with a Treasuries plus 125 bps spread, traded about 2 bps tighter than issuance.
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