High-grade deal volume slows; KfW, Fannie Mae on deck; strong post-holiday supply forecast

By Cristal Cody

Tupelo, Miss., July 2 – The investment-grade primary market saw a second consecutive session without any reported bond issuance on Tuesday.

High-grade issuer Commerzbank AG (A1/A-/BBB+) priced an upsized $1 billion of junk-rated 7% perpetual tier 1 capital subordinated notes (Ba2/BB/) on Tuesday following a roadshow.

Some deal action is expected ahead of an early market close on Wednesday from sovereign, supranational and agency issuers, which stayed out of the primary market last week.

KfW is marketing a dollar-denominated offering of three-year global notes.

Fannie Mae said it expects to price a benchmark-sized offering of notes due July 2, 2024.

The U.S. bond markets will close early at 2 p.m. ET on Wednesday and remain closed on Thursday for the Independence Day holiday.

Market sources said they expected zero up to about $5 billion of supply this week.

Deal volume is expected to increase next week following the holiday with syndicate sources forecasting about $15 billion to $20 billion of investment-grade corporate issuance.

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