Truist in primary market; steady post-holiday bond supply eyed; inflows strong on Fed buys

By Cristal Cody

Tupelo, Miss., May 22 – High-grade deal volume stayed light on Friday ahead of the early market close in the quietest deal session seen since early March.

Truist Financial Corp. exercised a $75 million over-allotment option of its new 5.25% perpetual series O non-cumulative preferred stock (Baa2/BBB-/BBB) during the session.

The company sold $500 million of the preferreds on Tuesday in a deal upsized from $200 million.

Volume has been strong leading up to the Memorial Day holiday on Monday with AT&T Inc. pricing $12.5 billion of notes in five tranches on Thursday.

More than $52 billion of investment-grade bonds were priced over the week, outpacing forecasts of about $30 billion to $40 billion of supply.

Looking ahead to next week, volume is expected to remain strong but lighter with about $25 billion to $30 billion of issuance expected, syndicate sources said.

The Canadian primary market also has been busy with new deals this week from issuers including Telus Corp., CI Financial Corp. and Federation des caisses Desjardins du Quebec and is expected to finish May on a strong note.

Market participants in Canada continue to work from home with “no talk of returning anytime soon,” a source said.

The process has been “remarkably smooth,” the source added. “Year-to-date supply is over 50% more than this time last year. Like in the U.S., people have just figured a way to get deals done and get them in the market. There seems to be reasonable support for a lot of supply.”

High-grade bond fund and ETF inflows have remained strong on the back of the Federal Reserve’s secondary market corporate credit facility purchase of U.S. corporate credit ETFs that began on Tuesday, according to a BofA Securities, Inc. research note released Friday.

U.S. investment-grade bond and ETF inflows, including for corporate bonds, Treasuries, agencies and mortgages, declined slightly to $7.6 billion for the past week ending Wednesday compared to $7.8 billion of inflows in the prior week.

High-grade ETF inflows rose to $4.4 billion from $3.04 billion a week ago, while credit fund inflows fell to $3.2 billion from $4.76 billion, according to the note.

Short-term high-grade inflows fell to $2.91 billion for the past week from $3.58 billion in the prior week, while inflows to high-grade excluding short-term rose to $4.69 billion from $4.22 billion a week earlier.

The Markit CDX North American Investment Grade 33 index softened more than 1 basis point to close the day at a spread of 87.16 bps.

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