Morning Commentary: Southwest Airlines, Steel Dynamics, FirstEnergy, RBC, Harley on deck

By Cristal Cody

Tupelo, Miss., June 3 – Investment-grade corporate and sovereign, supranational and agency bond supply is expected during Wednesday’s session, sources report.

Southwest Airlines Co. intends to price two tranches of notes (Baa1/BBB/BBB+) that include new seven-year notes talked to price at the 5.75% area and a tap of its 4.75% notes due May 4, 2023 talked to yield in the 4.375% area.

Steel Dynamics, Inc. also plans to bring two tranches of senior notes (Baa3/BBB-/BBB) to the primary market. The company is offering five-year notes with initial price talk in the Treasuries plus 262.5 basis points area and notes due Jan. 15, 2031 talked at the 312.5 bps spread area.

In addition, FirstEnergy Corp. expects to price two tranches of senior notes (Baa3/BBB-/BBB) during the session. The company is offering notes due Jan. 15, 2026 with talk in the 165 bps over Treasuries area and notes due Sept. 1, 2030 talked at the 187.5 bps spread area.

Meanwhile, Royal Bank of Canada plans to sell a dollar-denominated offering of five-year medium-term senior notes (A2/A/AA) on Wednesday. The notes are initially talked to price in the Treasuries plus 105 bps area.

In other supply expected on Wednesday, AerCap Ireland Capital DAC and AerCap Global Aviation Trust is offering five-year guaranteed senior notes (Baa3/BBB-/BBB-) that are initially guided to price at the 8.25% area.

Harley-Davidson Financial Services, Inc. plans to price a Rule 144A and Regulation S offering of five-year senior medium-term notes (Baa2/BBB/A-) that are talked at the Treasuries plus 387.5 bps area.

Service Properties Trust expects to price $500 million of split-rated registered guaranteed senior notes due Sept. 1, 2025 (Baa3/BB+) that are talked at the 8% area.

Also, Seagate Technology plc subsidiary Seagate HDD Cayman is offering senior notes due Jan. 15, 2031 (Baa3/BBB-/BBB-) on Wednesday. The notes are talked to print in the 387.5 bps spread area.

Looking at SSA deal action, the Council of Europe Development Bank (Aa1/AAA/AA+) launched a $500 million offering of three-year global Covid-19 response social inclusion bonds early Wednesday at mid-swaps plus 8 bps.

Initial price talk was at the mid-swaps plus 11 bps area with guidance firmed to the mid-swaps plus 10 bps area.

Also, CDP Financial Inc. (Aaa/AAA/AAA) is marketing a dollar-denominated Rule 144A and Regulation S offering of five-year senior notes during the session with talk at the mid-swaps plus 52 bps area.

More than $31 billion of high-grade bonds have priced week to date, led by a $10 billion six-tranche offering of notes from Amazon.com, Inc. (A2/AA-/A+) on Monday.

About $30 billion to as much as $50 billion of investment-grade issuance is expected this week by market participants.

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