Supply thin; United Airlines prices $3 billion; Denmark taps primary; World Bank plans deal

By Cristal Cody

Tupelo, Miss., Oct. 20 – Investment-grade corporate and sovereign, supranational and agency supply remained light on Tuesday.

United Airlines, Inc. sold $3 billion of class A pass-through certificates (A3/A/) at par to yield 5.875%, tighter than talk in the low to mid 6% area, a source said.

In other supply, U.S. Bancorp priced $500 million of 3.75% $25-par preferred shares (A3/BBB/BB+).

Also during the session, the Kingdom of Denmark (Aaa/AAA/AAA) sold $2 billion of notes due Oct. 27, 2022 at mid-swaps plus 1 basis point, compared to initial talk in the mid-swaps plus 5 bps area.

Coming up on Wednesday, International Bank for Reconstruction and Development, or World Bank, is expected to price dollar-denominated five-year global sustainable development notes (Aaa/AAA/AAA).

Also on Wednesday, the Federal Home Loan Bank System intends to sell a new two-year Global note.

Investment-grade corporate supply totals $11.5 billion week to date.

Credit spreads firm

Volume on Monday included $8 billion of bonds in the primary market, led by T-Mobile U.S. Inc. subsidiary T-Mobile USA, Inc.’s $4.75 billion a Rule 144A and Regulation S four-tranche offering of senior secured notes (Baa3/BBB-/BBB-).

About $15 billion of high-grade supply is expected this week, according to syndicate sources.

Issuance remains light with a large swath of companies still in earnings-related blackout reporting periods, sources note.

Investment-grade companies that posted earnings reports on Tuesday included W.R. Berkley Corp., Regions Financial Corp., Lockheed Martin Corp., Procter & Gamble Co., Synovus Financial Corp., Texas Instruments Inc. and Philip Morris International Inc.

The Markit CDX North American Investment Grade 35 index firmed nearly 1 bp over the session to a spread of 57.85 bps.

The PIMCO Investment Grade Corporate Bond index closed down 0.22% to 114.71.

The iShares iBoxx Investment Grade Corporate Bond ETF fell 0.21% to $134.80.

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