Morning Commentary: General Dynamics, Procter & Gamble, Thermo Fisher, Humana on deck

By Cristal Cody

Tupelo, Miss., March 23 – At least seven issuers marketed bonds in the high-grade primary market early Monday despite the coronavirus-related turmoil engulfing the globe, sources report.

General Dynamics Corp. is marketing five tranches of fixed-rate notes. The deal includes five-year notes with initial talk in the Treasuries plus 315 basis points to 320 bps area; seven-year notes talked to price at the 315 bps to 320 bps spread area; 10-year notes talked in the Treasuries plus 320 bps to 325 bps area; 20-year notes guided at the 320 bps to 325 bps area and 30-year notes with talk in the 325 bps to 330 bps spread area.

Procter & Gamble Co. also plans to price five tranches of notes during Monday’s session.

The company is offering five-year notes that are talked to price at the Treasuries plus 245 bps area; seven-year notes talked at the 250 bps spread area; 10-year notes guided at the 255 bps over Treasuries area; 20-year notes talked to price at the 250 bps spread area and 30-year notes with initial price talk at the Treasuries plus 260 bps area.

Wells Fargo & Co. intends to price two tranches of fixed-to-floating rate medium-term notes, including 11- and 31-year notes. Both tranches are talked to price at the Treasuries plus 375 bps area.

Thermo Fisher Scientific Inc. expects to price five- and 10-year senior notes. Initial price talk on both tranches is at the Treasuries plus 400 bps area.

Meanwhile, Humana Inc. is on deck with a two-part offering of five- and 10-year senior notes. Both tranches are initially talked to price at the Treasuries plus 412.5 bps area.

Alexandria Real Estate Equities Inc. is offering guaranteed senior notes due Dec. 15, 2030 that are initially talked to price at the Treasuries plus 425 bps area.

In addition, NStar Electric Co., doing business as Eversource Energy, is offering $400 million of 10-year eligible green debentures that are talked to price at the Treasuries plus 337.5 bps area.

On Friday, high-grade issuers priced more than $15 billion of bonds, bringing the week’s deal total to more than $60 billion.

Three announced deals were postponed last week, including two on Friday. EOG Resources, Inc. postponed Friday’s offering of three tranches of fixed-rate senior notes. Appalachian Power Co. also postponed an offering of fixed-rate senior notes on Friday.

On Tuesday, Entergy Corp. postponed a two-part offering of five- and 10-year senior notes.

Monday’s primary activity follows several Federal Reserve announcements over the morning, including new programs and measures that will provide up to $300 billion in new financing.

“The Federal Reserve is committed to using its full range of tools to support households, businesses, and the U.S. economy overall in this challenging time,” the Fed said in one release.

The Fed’s Federal Open Market Committee will purchase Treasuries, agency mortgage-backed securities and agency commercial mortgage-backed securities.

The Federal Reserve also is establishing two facilities to support credit to large employers – the Primary Market Corporate Credit Facility for new bond and loan issuance and the Secondary Market Corporate Credit Facility to provide liquidity to outstanding corporate bonds.

The Fed plans to establish a third facility, the Term Asset-Backed Securities Loan Facility, to enable the issuance of asset-backed securities backed by student loans, auto loans, credit card loans, loans guaranteed by the Small Business Administration and certain other assets.

In addition, a Main Street Business Lending Program is expected to be established to support lending to eligible small-and-medium sized businesses.

Stocks were down with the Dow Jones industrial average off 2.77% at 18,623.66, in late morning trading.

Treasuries mostly rallied with yields down 16 bps to 21 bps. The benchmark 10-year note yield was down 21.2 bps at 0.726% early Monday.

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