Morning Commentary: Total System, Caterpillar, United Airlines, Hope eye deals; Kellogg mixed

By Cristal Cody

Tupelo, Miss., May 9 – A few bond issuers are expected to tap the high-grade primary market on Wednesday.

Total System Services, Inc. is marketing two tranches of senior notes.

Caterpillar Financial Services Corp. is offering floating-rate notes.

Also in corporate supply, United Airlines, Inc. plans to sell class B pass-through certificates.

In other investment-grade supply expected during the session, the City of Hope (A1/A+/AA-) of California plans to price a 30-year taxable bullet bond. Moody’s Investors Service and S&P Global Ratings report the deal size at $300 million.

J.P. Morgan Securities LLC is the bookrunner.

Supply has picked up this week with strong volume both on Monday and Tuesday. More than $20 billion of high-grade bonds have priced week to date, market sources report.

Syndicate sources expect about $30 billion to $35 billion of supply this week.

New issues mostly firm

In the secondary market, new issues were mixed but mostly trading slightly better than issuance, according to market sources.

Kellogg Co.’s $1 billion of senior notes (Baa2/BBB) that priced in two tranches on Monday were flat to about 3 basis points tighter on the short end.

The 4.3% notes due May 15, 2028 traded wrapped around issuance at the 140 bps area.

The Battle Creek, Mich.-based cereal maker sold $600 million of the 10-year notes at a Treasuries plus 140 bps spread.

Consolidated Edison Co. of New York, Inc.’s $1 billion of debentures (A2/A-/A-) that also priced Monday in two parts firmed about 4 bps in secondary trading.

The electric utility’s $700 million of 4.5% debentures, priced with a Treasuries plus 140 bps spread, were quoted in the 136 bps area.

Overall secondary market volume climbed to $17.38 billion on Tuesday from $14.13 billion at the start of the week, according to Trace.

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