Morning Commentary: High-grade primary quiets; AbbVie continues marketing; inflows up

By Cristal Cody

Tupelo, Miss., Nov. 8 – Investment-grade bond market action stayed quiet at the start of Friday’s session after an active week that saw more than $20 billion of issuance.

About $25 billion to $30 billion of supply was anticipated by market sources for the week.

AbbVie Inc. will continue holding investor calls on Friday for a Rule 144A and Regulation S private offering of senior notes (Baa2/A-) expected to total as much as $30 billion, according to a market source.

The proceeds will be used to fund AbbVie’s acquisition of Allergan plc.

BofA Securities, Inc., Barclays and Morgan Stanley & Co. LLC are the lead managers.

The offering is anticipated to print in the upcoming week.

Meanwhile, flows to the high-grade space, including corporate, agencies, Treasuries and mortgage bonds, rose to $3.71 billion from $3.07 billion in the past week ended Wednesday, Yuri Seliger, a credit strategist with BofA Merrill Lynch, said in a research note released Friday.

Most of the increase was from short-term high-grade that saw inflows jump to $2.11 billion from $1.5 billion in the prior week.

Excluding short-term debt, inflows edged up to $1.6 billion from $1.57 billion.

Inflows to high-grade funds climbed to $3.07 billion this past week from $1.62 billion, while inflows to ETFs declined to $640 million from $1.45 billion.

The overall inflow to the fixed income space declined to $4.22 billion from $6.04 billion in the previous week on the back of government bond outflows and was “partially offset by stronger inflows to high grade and high yield,” Seliger said.

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