High-grade primary wraps for year with new paper firmer; new deal supply to climb in January

By Cristal Cody

Tupelo, Miss., Dec. 15 – Four issuers tapped the high-grade market this week ahead of the Federal Reserve’s rate decision Wednesday with the primary now mostly put away until 2024.

Corporate issuers led by National Bank of Canada priced $2.45 billion of notes in the first two sessions with the paper largely trading stronger in the secondary market, according to market sources.

National Bank of Canada’s new 5.6% notes due 2028 (A3/BBB+/A+) tightened about 1.5 basis points to 136 bps offered in secondary trading, a source said.

The bank sold $1 billion of the notes on Monday at a spread of 137.5 bps over Treasuries, better than talk at the 160 bps spread area.

Vistra Operations Co. LLC’s $400 million add-on to its 6.95% senior secured first lien notes due 2033 (Baa3/BBB-/BBB-) on Monday firmed about 5 bps from issuance to 235 bps offered, a market source said.

Vistra priced the notes 20 bps better than initial talk at a 240 bps over Treasuries spread.

Financial names including JPMorgan Chase & Co. and Monday issuer Ally Financial Inc. saw improvement in their credit default swaps spreads with higher implied ratings this week, according to a market source.

Ally Financial came by Monday with a $750 million offering of 6.848% fixed-to-floating-rate notes due 2030 (Baa3/BBB-) at a spread of 260 bps over Treasuries that was trading about 1 bp tighter than issuance, a source said.

The bonds priced tighter than talk at the 290 bps over Treasuries area.

Heavy January volume

Investment-grade corporate issuers have sold more than $20 billion of paper so far in December following more than $100 billion of issuance in November.

The primary market is basically finished for the year with participants looking to January supply, sources reported.

Volume in the New Year is expected to ramp up quickly.

About $150 billion of new investment-grade bond issuance is anticipated to print in the upcoming month – a total that would match the strong supply seen in January 2022, sources said.

New deal volume is expected to be higher than the tally from January 2023, when about $145 billion of high-grade corporate notes were brought to the market.

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