Morning Commentary: HSBC, GlaxoSmithKline, O’Reilly deals on tap; General Dynamics notes tighten

By Cristal Cody

Tupelo, Miss., May 10 – HSBC Holdings plc is on deck with what is expected to be a significantly sized two-tranche offering of notes on Thursday.

One source said the deal size could be as much as $5 billion.

Investment-grade primary action looks set to rev up again during the session after volume thinned to four issuers in the primary market on Wednesday, according to market sources.

GlaxoSmithKline Capital Inc. announced plans to price three tranches of fixed-rate notes, while GlaxoSmithKline Capital plc intends to sell one tranche of fixed-rate notes and two tranches of floaters. Both deals are guaranteed by parent company GlaxoSmithKline plc.

O’Reilly Automotive, Inc. intends to sell 10-year senior notes.

In addition, Southern California Gas Co. is marketing 30-year first mortgage bonds.

More than $28 billion of high-grade bonds have priced week to date with heavy supply seen Monday and Tuesday.

Syndicate sources expected about $30 billion to $35 billion of bond issuance this week.

Secondary active

While primary volume thinned on Wednesday, secondary trading volume climbed to $21.97 billion from $17.38 billion on Tuesday and $14.13 billion on Monday, according to Trace.

New investment-grade bonds priced this week are trading mostly better than issuance, according to market sources.

General Dynamics Corp.’s $7.5 billion of senior notes (A2/A+/A) brought to the market in seven tranches on Tuesday have tightened about 8 basis points to 10 bps in the secondary market, a source said.

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