High-grade primary quiet ahead of election; thin supply eyed; Berkshire Hathaway strong

By Cristal Cody

Tupelo, Miss., Nov. 2 – The high-grade primary market stayed quiet over Monday’s session with focus this week on the U.S. presidential election, the Federal Reserve’s two-day monetary policy meeting and the October jobs report.

Swedish Export Credit plans to price $600 million of 0.25% notes due May 10, 2022 in an offering expected to close on Thursday.

In other primary activity, the Bush Foundation joins the list of high-grade issuers bringing social bond deals this year with a $100 million offering of taxable social bonds due Oct. 1, 2050 (Aaa).

Issuers including Citigroup Inc., Bank of America Corp., the Ford Foundation and Caisse d'Amortissement de la Dette Sociale have priced social bonds year to date.

Anywhere from zero to about $10 billion of investment-grade supply is anticipated this week, according to syndicate sources.

November supply is forecast to total about $50 billion to $75 billion for the month.

Issuance is expected to be thin with the election on Tuesday, the Federal Reserve’s meeting that ends on Thursday and the Labor Department’s release of the October non-farm payroll report on Friday, sources said.

Earnings reports also remain in focus this week with hundreds of companies set to release results over the week, including more than 200 on Monday.

High-grade issuers that released reports on Monday included Berkshire Hathaway Inc., Clorox Co. and Loews Corp.

Credit spreads tighten

Credit spreads ended the day more than 2 basis points tighter.

The Markit CDX North American Investment Grade 35 index firmed 2.26 bps from Friday to a spread of 63.36 bps.

The high-grade space was mostly positive over the session.

The iShares iBoxx Investment Grade Corporate Bond ETF closed up 0.39% at $133.97.

The PIMCO Investment Grade Corporate Bond index gained 0.47% on the day to $114.24.

Stocks also were up over the day with the Dow Jones industrial average closing 1.6% better.

In the secondary market, Berkshire Hathaway Finance Corp. 2.85% senior notes due Oct. 15, 2050 (Aa2/AA/A+) were stronger, according to a market source.

The company’s 2.85% notes due Oct. 15, 2050 are trading with a 102 handle, going out on Monday at 102.78.

Berkshire Hathaway Finance sold $1.75 billion of the 30-year notes on Oct. 5 at 99.92 to yield 2.854%, or a Treasuries plus 127 bps spread.

The notes are guaranteed by Berkshire Hathaway.

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