Duke, Ameren Illinois sell bonds; supply thin ahead of elections; Rentenbank eyes deal

By Cristal Cody

Tupelo, Miss., Nov. 5 – Two utility issuers tapped the high-grade primary market on Monday in what was an otherwise quiet session.

Duke Energy Carolinas LLC priced a $1 billion offering of green first and refunding mortgage bonds in two parts following a roadshow and fixed-income investor calls last week.

Ameren Illinois Co. sold $500 million of long 30-year first mortgage bonds.

Looking ahead to Tuesday, Landwirtschaftliche Rentenbank plans to price a dollar-denominated offering of five-year global notes.

High-grade market sources expect about $15 billion to as much as $30 billion of issuance this week, though deal windows will be fewer with the mid-term U.S. elections on Tuesday, conclusion of the Federal Reserve’s monetary policy meeting on Thursday and the upcoming Veterans Day holiday weekend.

No major policy changes are expected from the Federal Reserve since the meeting will not include a press conference, but the potential for a rate hike is December is growing, a source said.

Investment-grade issuers priced more than $19 billion of bonds last week.

For November, syndicate sources expect about $75 billion to $85 billion of supply on average with the potential for as much as $120 billion of new issuance.

“Looking ahead, November is the last major issuance window of the year after companies exit earnings-related blackouts,” according to a BofA Merrill Lynch research note released on Monday. “Given the modest issuance volume in October, we look for a slightly stronger November.”

October high-grade volume totaled less than $100 billion for the month and was down 25% year over year, according to the note.

The Markit CDX North American Investment Grade 31 index firmed about 1 basis point on Monday to a spread of 65.5 bps.

Duke Energy sells $1 billion

Duke Energy Carolinas (Aa2/A/) priced $1 billion of green first and refunding mortgage bonds in two parts in the offering on Monday, according to an FWP filing with the Securities and Exchange Commission.

A $350 million tranche of 3.35% bonds due May 15, 2022 priced at 99.963 to yield 3.361%, or a spread of 38 bps over Treasuries.

Duke Energy Carolinas sold $650 million of 3.95% 10-year bonds at 99.631 to yield 3.995%. The bonds priced with a Treasuries plus 80 bps spread.

BNP Paribas Securities Corp., BofA Merrill Lynch, MUFG, Scotia Capital (USA) Inc. and TD Securities (USA) LLC were the bookrunners.

The Charlotte, N.C.-based company generates, transmits, distributes and sells electricity and is a wholly owned subsidiary of Duke Energy Corp.

Ameren Illinois prices

Ameren Illinois sold $500 million of 4.5% first mortgage bonds due March 15, 2049 (A1/A/) at a spread of Treasuries plus 107 bps during the session, according to an FWP filing with the SEC.

The bonds priced at 99.907 to yield 4.506%.

BNP Paribas Securities, Goldman Sachs & Co. LLC, BofA Merrill Lynch, Mizuho Securities USA LLC, SunTrust Robinson Humphrey, Inc. and KeyBanc Capital Markets Inc. were the lead managers.

Ameren Illinois is a subsidiary of St. Louis-based electric and natural gas company Ameren Corp.

Rentenbank markets notes

Coming up on Tuesday, Landwirtschaftliche Rentenbank (Aaa/AAA/AAA) plans to price a new dollar-denominated offering of five-year global notes, according to a market source and an a 424B5 filing with the SEC.

The notes due Nov. 14, 2023 were initially talked to price on Tuesday in the mid-swaps plus 6 bps area.

HSBC Securities (USA) Inc., RBC Capital Markets LLC, Societe Generale CIB and TD Securities are the bookrunners.

The German development agency for agribusiness is based in Frankfurt.

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