High-grade supply remains strong; lighter action eyed to close out August; new issues mixed

By Cristal Cody

Tupelo, Miss., Aug. 21 – The high-grade primary market quieted on Friday following about $45 billion of corporate and sovereign, supranational and agency issuance over the week.

Corporate issuers priced about $36 billion of bonds, while SSA issuers brought $8.7 billion of bonds this week.

About $30 billion to $40 billion of corporate issuance was expected for the week.

August has posted heavy volume so far at more than $120 billion to date but is expected to see lighter supply in the last week of the month, sources report.

About $15 billion to $20 billion of volume is forecast for the upcoming week.

Mergers and acquisitions-related funding activity made up a chunk of the high-grade deals priced this week.

Intercontinental Exchange Inc. sold $6.5 billion of senior notes (A3/BBB+/) in five tranches to finance its acquisition of Ellie Mae on Monday.

Roper Technologies, Inc. priced a $2.7 billion four-part offering of senior notes (Baa2/BBB+/) on Tuesday to fund its acquisition of Vertafore, Inc.

Johnson & Johnson was in the primary market on Thursday with a $7.5 billion six-tranche offering of fixed-rate notes (Aaa/AAA/) to fund its estimated $6.5 billion acquisition of Momenta Pharmaceuticals, Inc.

Roper firms

New issues were mixed in secondary trading after spreads leaked wider mid-week, according to market sources.

Intercontinental Exchange’s senior notes (A3/BBB+/) were mixed with the longer tranches trading about 1 basis point to 3 bps softer.

Roper Technologies’ $2.7 billion of senior notes (Baa2/BBB+/) were last seen about 1 bp to 5 bps tighter in the secondary market.

The $1 billion tranche of 1.75% notes due Feb. 15, 2031 improved about 1 bp.

The notes priced at a spread of 110 bps over Treasuries.

Initial price talk was at the 130 bps spread area.

In other secondary trading, Eli Lilly & Co.’s $1.1 billion of senior notes (A2/A+/A) priced in two tranches on Thursday were wrapped around issuance to about 1 bp softer.

The company’s 2.25% notes due May 15, 2050 were seen at 94 bps bid.

The issue was reopened in a $250 million add-on at a spread of Treasuries plus 93 bps.

Initial price talk was at the 140 bps spread area.

Eli Lilly originally sold $1 billion of the 2.25% notes on May 5 a Treasuries plus 110 bps spread. The total outstanding is now $1.25 billion.

Market tone stayed mostly positive over the day.

The PIMCO Investment Grade Corporate Bond index edged up 0.06% to 116.00.

The iShares iBoxx Investment Grade Corporate Bond ETF rose 0.18% to 136.45.

The Markit CDX North American Investment Grade 33 index headed out modestly tighter on Friday at a spread of 67.75 bps.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.