Morning Commentary: Lloyds, Welltower, CNH on deck; Elanco holds calls; new issues firm

By Cristal Cody

Tupelo, Miss., Aug. 9 – Investment-grade primary action is expected to remain busy during Thursday’s session following the approximately $30 billion of supply already priced so far this week.

Lloyds Banking Group plc is marketing two tranches of senior notes.

Welltower Inc. is on deck with a three-part offering of notes, including a reopening of its 4.25% notes due April 15, 2028.

CNH Industrial Capital LLC plans to price new six-year notes.

In other action on Thursday, Elanco Animal Health Inc. (Baa3/BB+/) is scheduled to hold fixed-income investor calls for a potential $2.5 billion offering of senior notes, according to a market source.

Citigroup Global Markets, Goldman Sachs and J.P. Morgan Securities are the arrangers.

Proceeds from the offering will be used to fund the Greenfield, Ind.-based animal health products company’s spin-off from Eli Lilly & Co. and for general corporate purposes.

Moody’s Investors Service assigned the company a high-grade rating on Wednesday.

Otherwise, market activity was somewhat quiet at the start of the session, a source said.

Volume has been heavy and surpassed market forecasts of about $20 billion to $25 billion of weekly supply on Wednesday.

New issue performance “continues to be strong despite the heavy volumes,” Yunyi Zhang, a BofA Merrill Lynch analyst, said in a report released on Thursday.

“The average new issue concession narrowed to 0.6 [basis point] from 2.9 bps last week. This week’s new issue bonds are trading 2.6 bps tighter on average from their pricing spreads.”

High-grade secondary market volume came to $17.29 billion on Wednesday, compared to $16.04 billion on Tuesday and $13.52 billion on Monday, according to Trace.

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