Morning Commentary: High-grade issuers find deal window; Entergy, Exxon, Verizon on tap

By Cristal Cody

Tupelo, Miss., March 17 – After a tumultuous Monday that saw the financial markets plunge amid the coronavirus ramifications to the economy and American life, high-grade bond issuers saw a glimmer of hope early Tuesday and rushed into the primary market.

Ten investment-grade companies are marketing bond deals, including Bank of America Corp., Consumers Energy Co., Dominion Energy, Inc., Entergy Corp., Exxon Mobil Corp., Oncor Electric Delivery Co. LLC, PepsiCo. Inc., Progressive Corp., Union Electric Co. and Verizon Communications Inc., sources report.

Bank of America is marketing notes due March 20, 2051 with initial price talk in the Treasuries plus 275 basis points area.

Consumer Energy is on deck with $400 million of notes due Aug. 1, 2051. Initial price talk is in the 215 bps spread area.

Dominion Energy expects to price two tranches of notes, including five-year notes that are initially talked to print in the Treasuries plus 262.5 bps to 275 bps area and seven-year notes talked at the 275 bps spread area.

Entergy is marketing a two-part offering of senior notes. The deal includes five-year notes talked to price at the Treasuries plus 275 bps area and 10-year notes with price talk in the Treasuries plus 287.5 bps area.

Exxon Mobil is on deck with five tranches of notes.

The deal includes five-, seven-, 10-, 20- and 30-year notes. The five-year tranche is talked to price at the Treasuries plus 235 bps area, the seven-year notes are talked at the 240 bps area, the 10-year tranche is guided to print in the 250 bps spread area, the 20-year notes are talked to price at a 260 bps spread area and the 30-year tranche is talked to print at the 275 bps over Treasuries area.

Oncor is marketing a two-part offering of 10- and 30-year notes. Initial price talk on the 10-year tranche is in the Treasuries plus 190 bps area, while the 30-year notes are talked in the 215 bps spread area.

PepsiCo intends to bring six tranches of senior notes to the primary market on Tuesday.

The deal includes five-year notes talked to price at the Treasuries plus 190 bps area, seven-year notes talked at the 195 bps spread area, 10-year notes talked at the 195 bps area, 20-year notes guided at the 205 bps spread area, 30-year notes talked at the 215 bps spread area and 40-year notes with initial talk in the 245 bps over Treasuries area.

Progressive is marketing 10-year notes with initial price talk in the Treasuries plus 250 bps area and 30-year notes guided to price at the 262.5 bps spread area.

Union Electric is offering $465 million of 10-year notes with initial price talk in the Treasuries plus 200 bps area.

Finally, Verizon is marketing a three-part offering of notes that includes seven-, 10- and 30-year tranches.

The seven-year notes are talked to price in the Treasuries plus 230 bps area, while the 10-year notes are talked at the 240 bps area and the 30-year tranche is guided to price at the Treasuries plus 270 bps area.

Stocks were mixed over the morning but moving into positive territory. The S&P 500 index was up 1.6%, while the Dow Jones industrial average was down 0.1%.

Treasuries declined across the curve over the morning as risk-off appetite faded some with the 10-year benchmark note yield up 4 bps at 0.77%.

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