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Morning Commentary: Development Bank of Japan, KfW to price notes; primary action slows
By Cristal Cody
Tupelo, Miss., Aug. 23 – The Development Bank of Japan and KfW set spreads for their bond offerings early Wednesday with demand strong for both deals, sources reported.
The transactions are expected to price later in the day.
The Development Bank of Japan plans to price $1.8 billion of five- and 10-year notes with the five-year tranche set to price at mid-swaps plus 42 basis points and the 10-year tranche to print at mid-swaps plus 59 bps.
KfW intends to price two-year notes with a spread of mid-swaps minus 4 bps.
Light primary action is expected over the session as issuance in the high-grade bond market slows ahead of the Labor Day holiday.
In the secondary market, trading volume picked up on Tuesday with $15.75 billion of bonds traded, up from $10.9 billion on Monday, according to Trace.
High-grade bonds were mostly flat in early secondary trading, according to a market source.
National Rural Utilities Cooperative Finance Corp.’s collateral trust bonds (A1/A/A+) priced earlier in the year were unchanged over the morning.
National Rural Utilities Cooperative’s 2.4% notes due April 25, 2022 were stable at 101.18, a market source said. The bonds priced in a $450 million offering on April 18 at 99.972 to yield 2.406% and a spread of Treasuries plus 70 basis points.
The company’s 3.05% notes due April 25, 2027 also were flat at 100.91 in early secondary trading. The $350 million tranche of 10-year bonds priced in the April 18 offering at 99.795 to yield 3.074%, or Treasuries plus 90 bps.
National Rural Utilities Cooperative is a market lender for electric cooperatives based in Herndon, Va.
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