Morning Commentary: High-grade issuers set busy pace; Hewlett, Caterpillar, others on tap

By Cristal Cody

Tupelo, Miss., April 6 – Monday’s supply in the high-grade primary market is expected to be packed following two record weeks of deal volume, sources report.

Investment-grade issuers including Hewlett Packard Enterprise Co., Caterpillar Financial Services Corp. and Broadcom Inc. are offering new bonds during the session.

Hewlett Packard is on deck with three tranches of senior notes (Baa2/BBB/BBB+), including three-year notes initially talked to price with a spread in the Treasuries plus 462.5 basis points area and four- and seven-year tranches talked at the 475 bps spread area.

Caterpillar is offering 10- and 30-year senior notes (A3/A/A) with initial talk in the Treasuries plus 245 bps area.

Broadcom intends to price two tranches of senior notes (Baa3/BBB-/BBB-) on Monday. The deal includes five-year notes with initial talk in the 475 bps over Treasuries area and 10-year notes talked at the 487.5 bps spread area.

Also on Monday, Analog Devices, Inc. is offering five-year green bonds (Baa1/BBB) that are talked to price at the Treasuries plus 325 bps area.

In the financial space, Credit Suisse AG, New York Branch plans to bring a two-part offering of senior notes (A1/A+) that includes two- and five-year notes talked at the Treasuries plus 300 bps area.

Mitsubishi UFJ Lease and Finance Co. Ltd. (A3/A-) also is marketing two tranches of senior notes. A five-year tranche is talked to price in the Treasuries plus 325 bps area, and a 10-year issue is talked at the 337.5 bps spread area.

BMW US Capital, LLC is in the day’s deal pipeline with three-, five- and 10-year senior notes (A1/A+) talked to price at the Treasuries plus 387.5 bps spread area.

Also, Ally Financial Inc. is offering five-year senior notes with initial guidance in the Treasuries plus 600 bps area.

In the energy space, PacifiCorp (A1/A/A+) is marketing long 10-year and 31-year first mortgage bonds that are talked to print in the Treasuries plus 250 bps area.

Tucson Electric Power Co. plans to price $350 million of 30-year senior notes (A3/A-) during the session. Initial price talk is in the Treasuries plus 300 bps area.

In addition on Monday, Burlington Northern Santa Fe, LLC is offering $575 million of senior debentures due Feb. 15, 2051 (A3/A) with initial talk in the Treasuries plus 210 bps area.

Strong front-loaded supply is expected this week ahead of the early market close on Thursday and full closure on Friday for the Good Friday holiday.

About $30 billion to as much as $80 billion of volume is expected this week.

More than $117 billion of investment-grade bonds priced last week, outpacing the prior week’s record volume of about $109 billion.

Issuance has hit new records in the wake of the coronavirus pandemic and federal stimulus measures to bolster the economy, including corporate primary and secondary bond purchases.

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