Morning Commentary: High-grade primary action slows; Kroger mixed; Southwest Gas notes firm

By Cristal Cody

Eureka Springs, Ark., Sept. 27 – High-grade primary action is expected to slow on Tuesday with one reported issuer in the deal pipeline.

Lakeland Bancorp, Inc. plans to price an offering of 10-year fixed-to-floating rate subordinated notes.

In the secondary market, Southwest Gas Corp.’s $300 million offering of 3.8% senior notes due 2046 that priced on Monday tightened about 4 basis points.

Kroger Co.’s senior notes (Baa1/BBB/BBB) that priced in a $1.75 billion three-part sale on Monday traded flat to about 1 bp tighter.

The Markit CDX North American Investment Grade index opened mostly unchanged at a spread of 79 bps.

The three-month Libor yield was steady at 85 bps.

On Monday, $12.79 billion of investment-grade issues were traded, according to Trace.

Southwest Gas firms

Southwest Gas’ 3.8% senior notes due 2046 tightened to 146 bps offered in the secondary market, a source said.

The company sold $300 million of the 30-year notes (A3/BBB+/A) on Monday at a spread of 150 bps over Treasuries.

Southwest Gas is a Las Vegas-based natural gas and construction company.

Kroger mixed

Kroger’s 2.65% notes due 2026 traded wrapped around issuance in the secondary market at 110 bps offered, according to a market source.

Kroger sold $750 million of the 10-year notes on Monday at a spread of 110 bps over Treasuries.

The company’s 3.875% notes due 2046 firmed to 154 bps offered in secondary trading.

Kroger priced $500 million of the bonds on Monday at Treasuries plus 155 bps.

Kroger is a Cincinnati-based grocery retailer.

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