Primary quiet; bank supply likely after earnings reports; Athene, Sempra Energy notes firm

By Cristal Cody

Tupelo, Miss., Jan. 12 – High-grade bond issuers took Friday off ahead of the long holiday weekend with no reported deals priced.

The bond markets will be closed on Monday for Martin Luther King Day.

Bank supply is expected in the near term on the heels of earnings releases, according to market sources.

JPMorgan Chase & Co. and Wells Fargo & Co. released fourth quarter earnings on Friday.

Coming up, Citigroup Inc. will release earnings on Tuesday, while Bank of America Corp. and Goldman Sachs Group, Inc. release earnings reports on Wednesday and Morgan Stanley releases earnings on Thursday.

In 2017, the big six U.S. banks issued $185 billion of senior notes, which included $43 billion of fixed-rate notes, $51 billion of floaters and $81 billion of fixed-to-floating-rate notes, according to a BofA Merrill Lynch credit research note.

Although the week ahead will be a short four-day market week, heavy supply is expected with about $25 billion to $30 billion of volume forecasted, according to market sources.

Market tone was strong during Friday’s session, a source said.

Most of the new issues priced over the week tightened in secondary trading.

Athene Holding Ltd.’s $1 billion of 4.125% senior notes due Jan. 12, 2028 sold on Tuesday tightened 7 basis points.

Sempra Energy’s $5 billion of senior notes (Baa1/BBB+/BBB+) brought to market in seven tranches on Tuesday traded about 1 bp to 3 bps tighter across the short-dated maturities, while the long bonds firmed about 8 bps.

Elsewhere, high-grade inflows accelerated from $3.24 billion to $4.31 billion, the highest inflow since November, for the week ended Wednesday, according to a BofA Merrill Lynch note released on Friday.

“Most of the increase was outside of short-term high grade (to $3.78 [billion] from $2.83 [billion]), while short-term high grade flows rose to $0.53 [billion] from $0.41 [billion],” BofA Merrill Lynch analyst Yuri Seliger said in the note.

Athene firms

Athene’s 4.125% senior notes due Jan. 12, 2028 (/BBB/BBB-) traded on Friday at 152 bps bid, 149 bps offered on Friday, a market source said.

The company sold $1 billion of the notes on Tuesday at a spread of Treasuries plus 160 bps, on the tight side of guidance of Treasuries plus 165 bps area and tighter than initial price talk in the Treasuries plus 175 bps area.

Athene Holding is a retirement services company based in Pembroke, Bermuda.

Sempra Energy improves

Sempra Energy’s 2.4% notes due Feb. 1, 2020 were quoted on Friday at 46 bps bid, 43 bps offered in secondary trading, according to a market source.

The $500 million tranche priced on Tuesday at a spread of 50 bps over Treasuries.

On the long end of the offering, Sempra Energy’s 4% notes due Feb. 1, 2048 improved to 110 bps bid, 108 bps offered.

The company sold $800 million of the 30-year bonds with a 118 bps spread over Treasuries.

Sempra is a San Diego-based electricity and natural gas utility and infrastructure company.

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