Morning Commentary: High-grade primary quiet on wait for Fed; Moller-Maersk, KKR firm

By Cristal Cody

Tupelo, Miss., June 19 – The investment-grade primary market took a breather at the start of Wednesday’s session with no reported U.S. issuers offering bonds.

The Federal Reserve will release its monetary policy decision later in the session. A rate hike is not widely expected following the June meeting.

Deal volume was light on Tuesday with only one reported company pricing dollar-denominated notes.

High-grade issuers have priced about $5 billion of bonds week to date with Monday’s session seeing more than $4 billion of supply.

About $15 billion to $20 billion of investment-grade corporate issuance was anticipated by market sources this week, though some expected as little as $10 billion of volume.

Secondary market volume was heavy in the previous session with $24.31 billion of bonds traded, compared to $17.34 billion on Monday, according to Trace data.

New issues priced this week are trading mostly flat to tighter in the secondary market, a source said.

A.P. Moller-Maersk A/S’ 4.5% notes due June 20, 2029 that priced on Monday firmed to the 245 basis points area.

The Copenhagen, Denmark-based integrated container shipping company (Baa3/BBB) sold $500 million of the notes at a Treasuries plus 250 bps spread.

KKR & Co. Inc. subsidiary KKR Group Finance Co. VI LLC’s new 3.75% senior notes due July 1, 2029 (A/A) have improved about 8 bps in secondary trading since pricing on Monday. The New York-based global investment company sold $500 million of the notes at a Treasuries plus 170 bps spread.

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