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Morning Commentary: Lloyds Banking, Kommunalbanken offer notes
By Cristal Cody
Tupelo, Miss., Jan. 4 – While winter weather continues to freeze most of the United States and a snowstorm blanketed New York City on Thursday, the high-grade primary market is expected to see some activity during the session.
Lloyds Banking Group plc is marketing 30-year fixed-rate subordinated notes, according to a filing late Wednesday with the Securities and Exchange Commission.
Also, Kommunalbanken AS intends to price five-year secured notes in a Rule 144A and Regulation S offering.
Issuance has been steady over the past two sessions of 2018 with supply expected to be strong for the rest of the month.
The three-month Libor yield rose 1 basis point to 1.7% on Thursday, a source said.
Investment-grade secondary trading has been active in the New Year with $15.36 billion of bonds traded on Wednesday, up from $11.87 billion on Tuesday, according to Trace.
In early secondary trading on Thursday, Lloyds Banking Group’s existing notes (A3/BBB+/A+) were active, a source said.
The company’s 2.907% senior callable fixed-to-floating rate notes due Nov. 7, 2023 traded at 98.66 over the morning. The notes were last seen in the secondary market on Wednesday at 98.99.
Lloyds sold $2.25 billion of the notes on Oct. 31 at par to yield a spread of Treasuries plus 90 bps. The notes will convert to a floating rate of Libor plus 81 bps from Nov. 7, 2022 to but excluding Nov. 7, 2023.
Lloyds Banking Group’s 3.574% senior callable fixed-to-floating rate notes due Nov. 7, 2028 were more active in secondary trading over the morning and were last seen at 98.66. The notes headed out on Wednesday at 99.06.
The London-based bank and financial services group priced $1.75 billion of the notes in the Oct. 31 sale at par to yield a Treasuries plus 120 bps spread. The notes will convert to a floating rate of Libor plus 120.5 bps from Nov. 7, 2027.
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