High-grade supply thin; Pershing Square markets notes; Kommuninvest offers dollar issue

By Cristal Cody

Tupelo, Miss., Oct. 26 – The high-grade bond market saw thin activity on Monday with just one reported preferred stock deal priced.

Bank of New York Mellon Corp. sold $582.5 million of 3.7% series H noncumulative perpetual preferred shares (Baa1/BBB/BBB+).

The preferreds priced tighter than talk in the 3.875% area, a source said.

In other primary action, Pershing Square Holdings, Ltd. (/BBB+/BBB) marketed up to $500 million of senior notes due no later than 2031 in a Regulation S offering during the session.

Much of the day’s primary action was seen in the high-yield space with several issuers offering bonds over the day.

Meanwhile, sovereign, supranational and agency issuance is expected in the high-grade primary market on Tuesday, a source said.

Kommuninvest I Sverige AB (Aaa/AAA/) is in the pipeline with dollar-denominated notes due July 20, 2022. The notes are talked to price in the mid-swaps plus 5 basis points area.

Light investment-grade supply is expected by market participants this week with numerous companies still in earnings-related reporting blackout periods.

About $15 billion of bonds are anticipated to price over the week, according to syndicate sources.

Credit spreads soften

The high-grade space was mixed over the day.

The Markit CDX North American Investment Grade 35 index eased about 1.6 bps over the session to a spread of 58.4 bps.

The PIMCO Investment Grade Corporate Bond index improved 0.25% to 114.98, while the iShares iBoxx Investment Grade Corporate Bond ETF rose 0.21% to 134.90.

Stocks remained pressured on Monday as coronavirus infections resurge in the United States and Europe. The Dow Jones industrial average closed the day down 2.29%, while the S&P 500 softened 1.86%.

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