Morning Commentary: Bank of Montreal offers notes; supply thin ahead of bank earnings results

By Cristal Cody

Tupelo, Miss., April 10 – Bank of Montreal is in the high-grade deal pipeline on Tuesday with a U.S. dollar-denominated two-part offering of senior medium-term notes.

Primary market action otherwise was fairly quiet over the morning and is expected to be thin for the week.

Corporate bank and financial earnings blackout periods are in full swing in April with Citigroup Inc., Wells Fargo & Co. and JPMorgan Chase & Co. among the first set to release first-quarter profit results on Friday.

Syndicate sources predict less than $20 billion of volume for the week with one market source expecting at least $10 billion of issuance and another estimating volume to top out around $17 billion.

Coming up, new issues are expected to follow roadshows being held by Syngenta AG and Ausgrid Finance Pty Ltd.

Syngenta (Ba2/BBB-/BBB) started its roadshow on Monday for a benchmark-sized dollar-denominated multi-tranche senior note offering and a euro-denominated fixed-rate senior note issue.

Ausgrid Finance Pty Ltd. kicked off a roadshow on Friday for a benchmark-sized note offering of five-year and/or 10-year senior notes.

The investment-grade primary market strengthened over the first week of issuance in April, according to a BofA Merrill Lynch note released on Tuesday.

“The performance of new issues was significantly stronger week over week,” BofA Merrill Lynch analysts said in the note. “The average new issue concession tightened to 2.4 [basis points] from 8.8 bps [in the last week of March], and break performance improved to 5.8 bps tighter on average from 2.5 bps tighter last week. As a result, the overall performance, which we define as new issue concession plus break performance, strengthened to 3.4 bps tighter this week from 6.3 bps wider a week earlier.”

In other activity, the high-grade secondary market saw trading volume on Monday of $14.67 billion, Trace reported.

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