Morning Commentary: DuPont, Baker Hughes, Liberty Mutual, Northern Trust, Dexia on tap

By Cristal Cody

Tupelo, Miss., April 28 – Deal volume slowed to a handful of issuers in the high-grade primary market early Tuesday after about $25 billion of bonds priced in the previous session, sources said.

DuPont de Nemours Inc. is offering two tranches of registered three-year senior notes (Baa1/BBB+/BBB+) that includes floating-rate notes talked at Libor plus a spread and fixed-rate notes talked to price in the Treasuries plus 275 basis points area.

Baker Hughes Holdings LLC and co-issuer Baker Hughes Co-Obligor, Inc. plan to price $500 million of 10-year registered senior notes (A3/A-) on Tuesday. Initial price talk is in the Treasuries plus 450 bps area.

Liberty Mutual Group Inc. is offering $500 million of 40-year senior notes (Baa2/BBB/BBB-) in a Rule 144A and Regulation S deal that has initial price guidance in the Treasuries plus 312.5 bps area.

Also in the day’s corporate deal pipeline, Northern Trust Corp. intends to price a registered offering of 10-year senior notes (A2/A+/AA-) that has initial price talk in the Treasuries plus 150 bps area.

Meanwhile, the session also is expected to see sovereign, supranational and agency supply with a new issue launched over the morning from Dexia Credit Local SA.

The Brussels, Belgium-based regional bank (Aa3/AA/BBB+) launched a $1.5 billion Rule 144A and Regulation S offering of three-year senior notes on Tuesday at mid-swaps plus 42 bps, tighter than initial talk in the 45 bps spread area.

About $40 billion to $50 billion of high-grade supply is expected by market sources this week.

The Federal Reserve kicked off its two-day monetary policy meeting on Tuesday. No additional policy changes are expected following the meeting’s conclusion on Wednesday, sources said.

In the secondary market, new issues priced Monday were mixed, a source said.

IDEX Corp.’s 3% senior notes due May 1, 2030 (Baa2/BBB/BBB+) were among the strongest in secondary trading with the bonds tightening 10 bps to 228 bps bid.

The Lake Forest, Ill.-based applied solutions company sold $500 million of the notes on Monday at 99.82 to yield 3.021% and a spread of Treasuries plus 237.5 bps.

Initial guidance was in the 300 bps over Treasuries area.

Overall high-grade corporate secondary market volume totaled $22.94 billion on Monday, according to Trace data.

High-grade ETFs were stronger at the start of Tuesday’s session as market sentiment improves with a number of governments and states beginning to ease coronavirus-related restrictions.

The iShares iBoxx Investment Grade Corporate Bond ETF gained 0.21% to 129.12.

The Pimco Investment Grade Corporate Bond index edged up 0.07% to 109.89.

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