Morning Commentary: Deal volume quiets ahead of holiday weekend; high-grade inflows dip

By Cristal Cody

Tupelo, Miss., Aug. 31 – Friday opened with little activity in the high-grade bond market ahead of the long holiday weekend.

The bond markets will be closed on Monday for the Labor Day holiday.

Supply has been light week to date with $6.75 billion of bonds priced, including $2.5 billion of corporate issuance.

Market sources had predicted up to about $5 billion of high-grade corporate volume for the week.

For the week ended Aug. 29, Lipper US Fund Flows reported inflows of $2.25 billion, down slightly from $2.68 billion of inflows reported in the prior week.

In the secondary market, trading volume declined on Thursday to $11.34 billion, Trace data shows. Secondary market volume totaled $15.90 billion on Wednesday, $13.72 billion on Tuesday and $10.21 billion on Monday.

Campbell Soup Co.’s notes (Baa2/BBB-) were mostly unchanged early Friday after closing stronger on Thursday following the company’s announcement that it plans to sell its fresh foods business, among other changes.

Hedge fund investor Third Point LLC is reportedly seeking a sale of the entire company.

Campbell Soup’s 4.15% notes due March 15, 2028 headed out on Thursday up about 2 points to 98.13.

The company sold $1 billion of the notes at 99.887 to yield 4.164%, or a spread of 130 basis points over Treasuries, on March 12.

Campbell Soup’s 4.8% notes due March 15, 2048 were steady after closing up more than a point to 91.34.

Campbell Soup sold the notes as part of a $5.3 billion seven-tranche deal in the March 12 offering at 99.527 to yield 4.83%, or a Treasuries plus 170 bps spread.

The notes headed out on Wednesday at 89.98.

S&P Global Ratings said on Thursday that it lowered the company’s bond ratings to BBB- from BBB because the company would be less diversified from the proposed divestitures with an increased reliance on its soup and beverage businesses.

The convenience foods company is based in Camden, N.J.

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