Morning Commentary: High-grade supply thins; Ontario Teachers on deck; Gilead mixed

By Cristal Cody

Tupelo, Miss., Sept. 24 – Investment-grade primary market activity thinned on Thursday after heavy supply in the previous two sessions.

Ontario Teachers’ Finance Trust (Aa1/AA+) plans to price a Rule 144A and Regulation S two-part dollar-denominated offering of senior notes in sovereign, supranational and agency supply over the day.

The offering includes three-year notes with initial price talk in the mid-swaps plus 28 basis points area and 10-year notes talked at the mid-swaps plus 65 bps area.

The corporate primary market was quiet over the morning.

More than $18 billion of corporate bonds were priced during Wednesday’s session, following more than $15 billion of issuance on Tuesday after a quiet Monday saw no volume.

Corporate bond supply totals more than $33 billion week to date.

About $30 billion to $35 billion of investment-grade issuance was expected for the week.

In the secondary market, new issues are trading mostly wrapped around issuance to moderately tighter, a source said.

Gilead Sciences Inc.’s $7.25 billion of senior notes (A3/A) priced in seven tranches on Wednesday were mixed. The company’s $1 billion tranche of 1.65% notes due Oct. 1, 2030 traded about 1 bp softer at 101 bps bid.

The company priced the notes at a spread of 100 bps over Treasuries.

Initial price talk was in the 125 bps spread area.

T-Mobile U.S. Inc. subsidiary T-Mobile USA, Inc.’s $4 billion Rule 144A and Regulation S offering of senior secured notes (Baa3/BBB-/BBB-) that priced in four tranches on Tuesday firmed about 1 bp to 6 bps in secondary trading.

T-Mobile’s reopened 2.55% notes due Feb. 15, 2031 improved about 1 bp to 139 bps bid.

The company priced a $750 million tap of the 2.55% notes at a Treasuries plus 140 bps spread.

Price guidance was in the Treasuries plus 165 bps area.

T-Mobile originally priced $1.75 billion of the notes on June 18 at a Treasuries plus 187.5 bps spread. The total outstanding is now $2.5 billion.

Investment-grade corporate secondary market activity totaled $21.91 billion on Wednesday, up from $17.94 billion on Tuesday and $15.34 billion on Monday, according to Trace.

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