Morning Commentary: Florida Power on deck; markets falter on pandemic, oil prices

By Cristal Cody

Tupelo, Miss., March 9 – Florida Power & Light Co. is offering 50-year floating-rate notes on Monday in the high-grade primary market.

Otherwise, supply was quiet as stocks tanked and Treasury yields dropped to unprecedented levels on continuing and expanding coronavirus infections, slashed oil prices and growing concerns of a recession.

Stocks were down about 5% with trading halted for 15 minutes at the start of the session. The Dow Jones industrial average declined more than 1,300 points, or 5.2%, over the morning.

The benchmark 10-year Treasury note yield was last seen down 19 basis points at 0.515% early Monday. At the start of the session, the 10-year note yield was below 50 bps.

Investment-grade credit spreads ended Friday more than 7 bps wider.

Deal volume totaled more than $27 billion last week, better than the $15 billion range expected, after the Federal Reserve trimmed interest rates on Tuesday.

Supply for this week is hard to forecast with the extreme volatility in the financial markets, sources report.

In the secondary market, Energy Transfer Operating LP’s 3.75% notes due May 15, 2030 (Baa3/BBB-/BBB-) sank as trading got underway early Monday to 80.86 from where the notes last traded on Friday at 99.71, a source said.

The Dallas-based natural gas midstream and intrastate transportation and storage company sold $1.5 billion of the bonds on Jan. 7 at 99.843 to yield 3.769% and a Treasuries plus 255 bps spread.

Cigna Corp.’s new 3.4% senior notes due March 15, 2050 (Baa2/A-/BBB) were seen in thin trading over the morning at 104.56, down from 104.98 on Friday but better than issuance, according to a market source.

The Bloomfield, Conn.-based health service company sold $1.25 billion of the 30-year notes on Wednesday at 99.813 to yield 3.41% and with a Treasuries plus 177 bps spread.

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