CIBC, SunTrust Banks, Goldman tap primary market; heavier supply forecast; CPPIB tightens

By Cristal Cody

Tupelo, Miss., Jan. 26 – Three issuers tapped the investment-grade primary market on Friday, bringing the week’s corporate deal total to more than $10 billion.

Canadian Imperial Bank of Commerce sold $1.35 billion of senior notes in two tranches during the session.

SunTrust Banks, Inc. priced two tranches of senior notes in a $1.25 billion deal.

Also, Goldman Sachs Group Inc. brought a $125 million add-on to its $2.5 billion of five-year floating-rate notes that originally priced on Jan. 18.

Supply thinned during the week and some market sources are predicting bouts of anemic issuance over the year from a variety of headwinds including the lower corporate tax rate.

Deal action, though, is expected to pick up in the week ahead. About $20 billion of volume is expected with corporate supply anticipated to increase as companies exit blackout earnings periods, according to market sources.

In other investment-grade market activity, secondary trading has been strong over the week, and spreads remained mostly modestly firm on Friday, sources said.

Capital One Financial Corp.’s $3 billion of senior notes (Baa1/BBB/A-) priced on Thursday were mixed in the secondary market.

CPPIB Capital Inc.’s $2 billion of 2.375% notes due Jan. 30, 2021 sold on Tuesday traded about 1.5 basis points better.

The Markit CDX North American Investment Grade 29 index tightened nearly 1 bp to close Friday at a spread of 45 bps.

Elsewhere, investment-grade inflows climbed on the week.

“Inflows to U.S.-domiciled fixed income funds and ETFs accelerated to $5.71 [billion] during the week ended January 24th, 2018 from $1.9 [billion] the week before, driven by a significant improvement in high grade,” Yunyi Zhang, an analyst with BofA Merrill Lynch, said in a research note, citing fund flow data from BofA Merrill Lynch and EPFR Global Co.

U.S. high-grade funds and ETF inflows rebounded to $4.46 billion, the strongest week since the week ended Nov. 1, 2017, from $2 billion in the previous week, according to the note.

“The improvement was across the board,” Zhang said. “Inflows more than double for not only HG funds to $3.45 [billion] from $1.51 [billion], but also HG ETFs to $1.01 [billion] from $0.49 [billion] a week earlier. Short-term HG inflows jumped to $1.07 [billion] from $0.01 [billion], and outside-of-short-term HG inflows also accelerated to $3.4 [billion] from $2 [billion] the prior week.”

CIBC prices $1.35 billion

Canadian Imperial Bank of Commerce (A1/A+/AA-) priced $1.35 billion of senior notes (A1/A+/AA-) in two tranches on Friday, according to a market source and an FWP filing with the Securities and Exchange Commission.

The bank priced $600 million of three-year floating-rate notes at par to yield Libor plus 31.5 bps, while pricing the $750 million tranche of 2.7% fixed-rate notes due Feb. 2, 2021 at 99.874 to yield 2.744%, or a spread of 50 bps over Treasuries.

CIBC World Markets Corp., Citigroup Global Markets Inc., Deutsche Bank Securities Inc., BofA Merrill Lynch and Wells Fargo Securities LLC were the bookrunners.

Proceeds will be added to the bank’s funds and used for general corporate purposes.

The diversified financial institution is based in Toronto.

SunTrust sells $1.25 billion

SunTrust Banks priced $1.25 billion of senior notes (Baa1/BBB+/A-) on Friday in two tranches, according to a market source.

The $750 million tranche of 2.59% three-year notes priced with a spread of Treasuries plus 48 bps. The notes priced better than initial guidance in the 65 bps spread area.

SunTrust Banks priced $500 million of 3% five-year notes at a 60 bps over Treasuries spread. The notes were initially talked to price in the Treasuries plus 75 bps spread area.

Credit Suisse Securities (USA) LLC, Goldman Sachs & Co. LLC, SunTrust Robinson Humphrey Inc. and UBS Securities LLC were the bookrunners.

The financial holding company for SunTrust Bank is based in Atlanta.

Capital One mixed

Capital One Financial’s 3.2% notes due Jan. 30, 2023 softened to 81 bps bid, 78 bps offered in the secondary market, a source said on Friday.

Capital One sold $1.25 billion of the notes on Thursday at a spread of Treasuries plus 80 bps.

The company’s 3.8% notes due Jan. 30. 2028 firmed to 119 bps bid, 116 bps offered.

Capital One priced $1.4 billion of the 10-year notes at a Treasuries plus 120 bps spread.

The financial services company is based in McLean, Va.

CPPIB firms

CPPIB Capital’s 2.375% notes due Jan. 30, 2021 were quoted on Friday trading at 26.5 bps bid, 25 bps offered, according to a market source.

The three-year notes priced on Tuesday at a spread of Treasuries plus 28.1 bps.

CPPIB Capital (Aaa/AAA/AAA) sold $2 billion of the notes in line with price talk at a spread of mid-swaps plus 9 bps.

The investment management company for the Canada Pension Plan Investment Board is based in Toronto.

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