Morning Commentary: Expedia, Japan Bank for International Cooperation, KfW on deck

By Cristal Cody

Tupelo, Miss., July 7 – Corporate and sovereign, supranational and agency supply is expected to print over Tuesday’s session in the high-grade primary market, according to market sources.

In corporate volume, Expedia Group, Inc. announced plans to price a Rule 144A and Regulation S offering of senior notes.

Expedia last tapped the primary market with an upsized $2.75 billion two-part offering of senior notes (Baa3/BBB-) on April 23.

Meanwhile, Japan Bank for International Cooperation is marketing new guaranteed bonds (A1/A+) on Tuesday. Japan Bank was previously in the primary market on May 13 with a $2 billion sale of three-year guaranteed bonds.

KfW (Aaa/AAA/AAA) is offering dollar-denominated five-year global notes on Tuesday.

The notes are initially talked to price in the mid-swaps plus 17 basis points area.

In addition, several issuers are holding fixed income investor calls for potential deals.

On Monday, more than $13 billion of investment-grade bonds priced, led by Mizuho Financial Group, Inc.’s $2.5 billion three-tranche offering of senior notes (A1/A-) in the first diversity and inclusion bond issuance by a Japanese bank.

Investment-grade supply is expected by market participants to reach $20 billion to $25 billion this week.

In the secondary market, Realty Income Corp.’s 3.25% senior notes due Jan. 15, 2031 (A3/A-/BBB+) that were reopened on Monday tightened about 5 bps, a source said.

Realty Income priced a $350 million add-on to the notes at 108.241 to yield 2.341% and a spread of 165 bps over Treasuries.

The issue first priced in a $600 million offering on May 6 at 98.987 to yield 3.364%, or Treasuries plus 265 bps. The total outstanding is now $950 million.

Market tone softened early Tuesday after staying positive on Monday.

The iShares iBoxx Investment Grade Corporate Bond ETF declined 0.03% to 135.36.

The Pimco Investment Grade Corporate Bond index fell 0.15% to 114.63.

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