KfW preps three-year notes; primary quiet amid global sell-off; Charter, Bank of America firm

By Aleesia Forni and Cristal Cody

New York, Jan. 4 – Germany’s KfW announced plans to price an offering of three-year notes this week, giving the investment-grade primary bond market its only signs of activity to open the new year.

The bank is planning to price a benchmark offering of notes (Aaa/AAA/AAA) on Tuesday, announcing price talk in the mid-swaps plus 22 basis points area.

The bookrunners are Barclays, Morgan Stanley & Co. LLC and RBC Capital Markets LLC.

The German government-owned development bank is based in Frankfurt.

Meantime, a number of potential issuers stood down to open the calendar year on Monday as weak economic data out of China sparked fears of a global slowdown, sending stocks tumbling.

One market source noted that Tuesday could be an active session for primary markets depending on the market’s tone overnight.

Around $25 billion to $30 billion of new issuance is expected for the opening week of the calendar year.

Investment-grade bonds headed out mostly unchanged to slightly tighter in secondary trading on Monday.

Charter Communications Inc.’s bonds (Ba1/BBB-) traded flat to 2 basis points better over the day.

Walgreens Boots Alliance Inc.’s 3.8% senior notes due 2024 firmed 1 bp.

Bank of America Corp.’s 3.875% senior notes due 2025 tightened 2 bps.

The Markit CDX North American Investment Grade 25 index ended the day about 1 bp tighter at a spread of 90 bps.

Funds see outflows

Lipper US Fund Flows reported an outflow of $1.6 billion from corporate investment-grade bond funds for the week ended Dec. 30.

The calendar year of 2015 saw $1.82 billion of net inflows.

S&P reports

In other market news, Standard & Poor’s reported that investment-grade corporate bond spreads widened during the month of December.

The U.S. investment-grade spread eased to 217 basis points on Dec. 31 from 208 bps on Nov. 30.

Similarly, the agency reported that speculative-grade spreads widened significantly to 775 bps from 715 bps over the same period.

Charter Communications mixed

Charter Communications’ 4.908% notes due 2025 firmed 2 bps in secondary trading on Monday to 267 bps bid, a market source said.

The company sold $4.5 billion of the bonds on July 9 at a spread of Treasuries plus 260 bps.

Charter Communications’ 6.484% bonds due 2045 were unchanged at 340 bps bid.

The company sold $3.5 billion of the bonds in the July 9 offering at Treasuries plus 335 bps.

The provider of cable, internet and phone services is based in Stamford, Conn.

Walgreens better

Walgreens Boots Alliance’s 3.8% notes due 2024 firmed 1 bp to 189 bps bid, according to a market source.

The company sold $2 billion of the notes (Baa2/BBB/) on Nov. 6, 2014 at Treasuries plus 145 bps.

Walgreens Boots Alliance is a subsidiary of Deerfield, Ill.-based drugstore operator Walgreens Co., which plans to acquire Rite Aid Corp.

Bank of America tightens

Bank of America’s 3.875% senior notes due 2025 firmed 2 bps during the session to 141 bps bid, a market source said.

Bank of America sold $2.5 billion of the notes (Baa1/A-/A) on July 27 at 167 bps plus Treasuries.

The financial services company is based in Charlotte, N.C.

Ford Motor Credit flat

Ford Motor Credit Co. LLC’s 4.134% notes due 2025 headed out unchanged at 192 bps bid in the secondary market, a source said.

The company sold $700 million of the notes (Baa3/BBB-/BBB-) on July 30 at a spread of Treasuries plus 187.5 bps.

Ford Motor Credit is the financing arm of Dearborn, Mich.-based automaker Ford Motor Co.

JPMorgan firms

JPMorgan Chase & Co.’s 4.25% subordinated notes due 2027 traded 2 bps tighter on Monday at 204 bps bid, a market source said.

JPMorgan sold $2 billion of the bonds (Baa1/A-/A) on Sept. 23 at a spread of Treasuries plus 215 bps.

The financial services company is based in New York City.

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