High-grade supply heavy; Nestle, Valero, Honda, Unilever, MUFG price; SSA supply on tap

By Cristal Cody

Tupelo, Miss., Sept. 8 – Investment-grade supply revved up on Tuesday following the long holiday weekend and light supply in the prior week with more than $21 billion of bonds priced over the session.

Deal volume is expected to be strong over the short week with about $50 billion to $60 billion of issuance anticipated by market participants.

Nestle Holdings Inc. (Aa3/AA-) headed up supply with $4 billion of fixed-rate senior notes in four tranches, bringing $1.15 billion of notes due Jan. 15, 2024, $750 million of notes due Jan. 15, 2026, $1.1 billion of notes due Sept. 15, 2027 and $1 billion of 10-year notes.

Valero Energy Corp. brought $2.5 billion of senior notes (Baa2/BBB/BBB) in four parts. The company sold $575 million of three-year floating-rate notes, $925 million of notes due March 15, 2024, a $400 million add-on to its 2.85% notes due April 15, 2025 and $600 million of seven-year notes.

Danske Bank A/S priced a $2 billion two-tranche offering of notes (Baa3/A) on Tuesday.

The company sold $1.25 billion of three-year notes and $750 million of six-year notes.

BAE Systems plc (Baa2/BBB/BBB) tapped the primary market with $2 billion of senior notes in two tranches, including $1 billion of notes due Feb. 15, 2031 and $1 billion of notes due Feb. 15, 2050.

American Honda Finance Corp. priced $1.8 billion of medium-term notes (A3/A-) in three tranches during the session.

The company sold $300 million of three-year floating-rate notes, $750 million of three-year fixed-rate notes and $750 million of five-year notes.

Anglo American Capital plc priced $1.5 billion of senior notes (Baa2/BBB/BBB) in two parts that included a $1 billion tranche of 10-year notes and $500 million of 30-year notes.

Mitsubishi UFJ Financial Group, Inc. placed $1.5 billion of fixed-to-fixed reset rate notes due Sept. 15, 2024 (A1/A-/A) on Tuesday.

Unilever Capital Corp. sold $1 billion of guaranteed senior notes (A1/A+/A+) in two parts. The company priced $500 million of three-year notes and $500 million of 10-year notes.

In addition to Valero, other energy supply included a deal from Entergy Arkansas, LLC, which priced $675 million of first mortgage bonds due June 15, 2051 (A2/A).

Also, Arizona Public Service Co. sold $400 million of 30-year green senior notes (A2/A-/A).

In other issuance on Tuesday, Johnson Controls International plc and Tyco Fire & Security Finance SCA sold $625 million of 10-year green senior notes (Baa2/BBB+/BBB) following fixed income investor calls for the deal last week.

Kimberly-Clark Corp. priced $600 million of seven-year senior notes (A2/A) over the day.

In other supply offered, American Financial Group, Inc. sold $200 million of $25-par 40-year subordinated debentures (Baa2/BBB-) on Tuesday.

Also, MetLife, Inc. priced $1 billion of perpetual fixed-rate reset non-cumulative preferred stock (Baa2/BBB).

Deal pipeline fills

Meanwhile, the investment-grade deal pipeline is expected to remain strong this week with numerous issuers marketing notes or holding fixed-income investor calls, a source said.

Sempra Energy is marketing $600 million of registered fixed-to-fixed reset rate junior subordinated notes due Feb. 1, 2051 (Baa3/BBB-/BBB-).

Coming up on Wednesday, the European Investment Bank (Aaa/AAA/AAA) plans to price a dollar-denominated registered offering of global notes due Dec. 15, 2025.

Initial price talk is in the mid-swaps plus 11 basis points area.

Also, the Inter-American Development Bank (Aaa/AAA) is offering dollar-denominated global notes due Sept. 16, 2027 in the primary market on Wednesday.

Initial price talk is in the mid-swaps plus 17 bps area.

The Markit CDX North American Investment Grade 33 index softened to a spread of 68.78 bps on Tuesday from where it was last seen ahead of the Labor Day holiday at a 66.7 bps spread.

The iShares iBoxx Investment Grade Corporate Bond ETF improved 0.1% over the day to 135.08.

The Pimco Investment Grade Corporate Bond index edged up 0.44% to 115.71.

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