Midday Commentary: All eyes on Apple's first bond; Colgate, McDonald's notes trade weaker

By Aleesia Forni

Virginia Beach, Va., April 30 - Players in the investment-grade bond market are focused on the much anticipated notes offering from Apple Inc. on Tuesday, according to market sources.

"It's all about Apple today," one trader said at midday.

The company is set to price its first sale of notes in six tranches during Tuesday's session.

In secondary market action, Monday's new issues from Colgate-Palmolive Co. and McDonald's Corp. were trading slightly wider on the day.

The Markit CDX North American Investment Grade index was unchanged at a spread of 76 basis points on Tuesday.

Apple sets talk

Apple is planning to price in the ballpark of $15 billion of bonds during Tuesday's session, market sources said.

Investor demand for the bonds had reached $40 billion by midday.

Included in the sale are floating-rate tranches due 2016 and 2018. Both are non-callable.

Price guidance for the three-year tranche is Libor plus 10 bps, and guidance for the five-year tranche is Libor plus 30 bps.

The remainder is fixed-rate notes due 2016, 2018, 2023 and 2043.

The company has set talk for the notes due 2016 at Treasuries plus 25 bps. The five-year notes are talked at Treasuries plus 45 bps.

The notes due 2023 are talked at Treasuries plus 80 bps, while the fixed-rate notes due 2043 are being guided at Treasuries plus 105 bps.

The computer and mobile communications device company is based in Cupertino, Calif.

Colgate upsizes

The secondary market saw Colgate-Palmolive's recent $400 million of 2.1% 10-year bonds trade at 57 bps offered at midday.

The notes were quoted at 59 bps bid, 55 bps offered late Monday following a sale at 60 bps over Treasuries.

The offering also included $400 million of 0.9% five-year notes priced a spread of Treasuries plus 32 bps.

Colgate is a New York City-based consumer products company.

McDonald's goes long

In other trading, McDonald's $500 million sale of 3.625% 30-year bonds was quoted at 82 bps offered early during the session.

The notes priced at Treasuries plus 83 bps, and a source at another desk had quoted the notes at 81 bps bid during Monday's session.

McDonald's was last in the U.S. bond market with a $900 million sale of notes in two parts on May 23, 2012.

The fast food chain is based in Oak Brook, Ill.

Andrea Heisinger contributed to this commentary

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