Morning Commentary: Toronto-Dominion, Florida Gas, Ares, Pinnacle, Delta eye primary

By Cristal Cody

Tupelo, Miss., June 10 – A handful of issuers marketed and sold bonds in the high-grade primary market over the morning as the Federal Reserve wraps up its two-day policy meeting on Wednesday, sources report.

No additional rate cuts are expected by market sources. The next Fed policy meeting is scheduled for July 28-29.

In new supply, Toronto-Dominion Bank is offering senior medium-term notes (Aa3/A) in two tranches that include three-year notes with initial price talk at the Treasuries plus 80 basis points area and five-year notes talked at the 100 bps spread area.

Florida Gas Transmission, LLC (Baa2/BBB+) plans to price a $500 million Rule 144A and Regulation S offering of 10-year notes during the session.

Initial price talk is in the Treasuries plus 215 bps area.

Ares Management Corp. subsidiary Ares Finance Co. II LLC also expects to price a $350 million Rule 144A and Regulation S offering. The company is marketing 10-year guaranteed senior notes (BBB+/BBB+) that are talked to print at the high 200 bps over Treasuries area.

Pinnacle West Capital Corp. intends to price $500 million of five-year senior notes (A3/BBB+/A-) on Wednesday. Initial price talk is in the Treasuries plus 115 bps area.

Meanwhile, Delta Air Lines Inc. (Baa3/BB/BB+) is offering split-rated notes due in 2026 with talk at the 8% area.

Also on Wednesday, Sempra Energy is marketing perpetual fixed-rate reset preferred stock (Baa3/BBB-/BBB-) with talk at the 5.125% to 5.25% area.

In other supply, the Federal Home Loan Bank System priced a $500 million reopening of its 0.5% Global notes due April 14, 2025 early Wednesday.

FHLBank also plans to price new two-year Global notes on Thursday.

Investment-grade corporate issuers priced more than $12 billion of bonds over Monday’s session and over $7 billion of paper on Tuesday. The sovereign, supranational and agency space was quiet on Monday, while Tuesday’s session saw $6.5 billion of volume.

About $30 billion to $40 billion of investment-grade deal volume is expected in the primary market this week.

In the secondary market, $27.07 billion of high-grade bonds traded on Tuesday, down slightly from the $27.34 billion of bonds traded on Monday, according to Trace data.

New issues were mixed, sources said.

Equinix Inc.’s $2.6 billion of senior notes (Baa3/BBB-/BBB-) that priced in four tranches on Monday traded 3 bps better on the five-year tranche, while the seven-, 10- and 30-year tranches traded about 1 bp wider than issuance.

The Redwood City, Calif.-based data center company sold $500 million of 1.25% notes due July 15, 2025 at a spread of Treasuries plus 85 bps; $500 million of 1.8% notes due July 15, 2027 at Treasuries plus 115 bps; $1.1 billion of 2.15% notes due July 15, 2030 at Treasuries plus 130 bps; and $500 million of 3% notes due July 15, 2050 at a spread of Treasuries plus 145 bps.

Initial price talk on the five-year notes was in the Treasuries plus 120 bps area, while the seven-year notes were talked at the 150 bps spread area, the 10-year notes at the 165 bps spread area and the 30-year notes at the 185 bps spread area.

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