High-grade supply thins; Avolon, Ontario Teachers price; bonds mixed; inflows decline

By Cristal Cody

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

Avolon Holdings Funding Ltd. (Baa3/BBB-/BBB-) was the sole reported corporate issuer in the market over the day.

The company priced $650 million of guaranteed senior notes due Jan. 15, 2026 following fixed income investor calls on Wednesday for the Rule 144A and Regulation S offering.

Sovereign, supranational and agency supply continued with a $3 billion Rule 144A and Regulation S two-part sale of senior notes from Ontario Teachers’ Finance Trust (Aa1/AA+/) on Thursday.

The trust sold $1.5 billion of three-year notes and $1.5 billion of 10-year notes.

In other activity, Marathon Petroleum Corp. is holding a virtual roadshow and fixed income investor calls that began on Tuesday, a source said.

Citigroup Global Markets Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC and TD Securities (USA) LLC are the arrangers.

The Findlay, Ohio-based crude oil refiner last tapped the high-grade bond market on April 23 when it priced a $2.5 billion two-tranche offering of senior notes (Baa2/BBB/BBB).

Corporate bond supply totals more than $34 billion week to date following over $18 billion of issuance on Wednesday and more than $15 billion of deal volume on Tuesday. The primary market was quiet on Monday.

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

Elsewhere, high-grade corporate funds inflows declined to $4.16 billion for the past week ended Wednesday from $5.17 billion in the prior week and $6.54 billion in the week prior, according to Refinitive Lipper US Fund Flows.

Net inflows year to date total $85.78 billion.

Credit spreads ease

The Markit CDX North American Investment Grade 35 index continued to soften on Thursday after widening nearly 5 basis points in the prior session. The CDX high-grade index eased more than 1 bp to a spread of 58.79 bps.

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-) 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 at a Treasuries plus 187.5 bps spread. The total outstanding is now $2.5 billion.

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