Morning Commentary: Federal Realty Trust, Brookfield offer notes; Berkshire improves

By Cristal Cody

Tupelo, Miss., Oct. 8 – Primary action slowed at the start of Thursday’s session with just two reported high-grade issuers offering bonds, according to market sources.

Federal Realty Investment Trust is offering fixed-rate green notes (A3/A-) after the company held fixed income investor calls on Wednesday.

Brookfield Finance Inc. is marketing $25-par 50-year guaranteed subordinated notes (Baa1/A-/A-) on Thursday following fixed income investor calls in the previous session.

Investment-grade issuers already have priced more than $23 billion of corporate and sovereign, supranational and agency bonds week to date, beating market forecasts of $15 billion to $20 billion of supply for the week.

New issues trade

New issues are trading mostly better than issuance in the secondary market this week, sources report.

LyondellBasell Industries NV subsidiary LYB International Finance III, LLC’s $3.9 billion of guaranteed notes (Baa2/BBB-/BBB) that priced in six tranches on Tuesday improved about 4 basis points to 5 bps.

The company’s $1 billion tranche of 3.625% notes due April 1, 2051 were last seen 4 bps tighter at 206 bps bid.

LYB priced the issue at 99.707 to yield 3.641% and a spread of Treasuries plus 210 bps.

The notes were guided at the 240 bps spread area.

Berkshire Hathaway Finance Corp.’s $1.75 billion of 2.85% senior notes due Oct. 15, 2050 (Aa2/AA/A+) that priced at the start of the week are trading with a 102 handle.

The notes were quoted up at 102.52 over the morning, better than 102.09 on Wednesday.

Berkshire Hathaway Finance sold $1.75 billion of the 30-year notes at 99.92 to yield 2.854%, or a Treasuries plus 127 bps spread.

Initial price talk was in the 155 bps spread area.

The company’s 1.45% notes due Oct. 15, 2030 were quoted mostly unchanged in the 99.73 area early Thursday.

Berkshire Hathaway Finance sold $750 million of the 10-year notes at 99.796 to yield 1.472%, or a 70 bps over Treasuries spread.

The notes were talked to print in the 95 bps over Treasuries area.

Secondary volume this week has included $23.3 billion of corporate bonds traded on Wednesday, $23.58 billion on Tuesday and $18.84 billion on Monday, according to Trace.

Meanwhile, market tone was positive over the morning with the Pimco Investment Grade Corporate Bond index up 0.30% at 114.78.

The iShares iBoxx Investment Grade Corporate Bond ETF climbed 0.35% to 134.76 in early trading.

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