Morning Commentary: High-grade supply heavy; Nestle, Valero, Honda, Unilever on deck

By Cristal Cody

Tupelo, Miss., Sept. 8 – Investment-grade supply revved up on Tuesday following the long holiday weekend and light supply in the prior week with more than a dozen issuers offering bonds at the start of the day, market sources said.

Deal volume is expected to be strong over the short week with about $50 billion to $60 billion of issuance anticipated by market participants.

Nestle Holdings Inc. (Aa3/AA-) is marketing four tranches of dollar-denominated fixed-rate senior notes.

The deal includes notes due 2024 talked to price in the Treasuries plus 45 basis points area, notes due 2026 talked at the 60 bps over Treasures area, notes due 2027 guided in the 75 bps over Treasuries area and 10-year notes talked at the Treasuries plus 85 bps spread area.

Valero Energy Corp. also intends to bring four tranches of senior notes (Baa2/BBB/BBB) to the primary market over the day.

The deal includes new three-year floating-rate notes talked at the Libor plus 125 bps area, four-year notes talked at the 125 bps over Treasuries area and seven-year notes talked to print in the 190 bps over Treasuries area.

Valero plans to price an add-on to its 2.85% notes due April 15, 2025 that were first priced on April 14. Initial guidance is in the 145 bps over Treasuries area.

American Honda Finance Corp. intends to price a three-part offering of fixed- and floating-rate medium-term notes (A3/A-) on Tuesday.

The deal includes three-year floating-rate notes talked to print off the Libor benchmark, three-year fixed-rate notes talked to price in the Treasuries plus 70 bps to 75 bps area and five-year notes talked at the 95 bps to 100 bps area.

Unilever Capital Corp. is on deck with two tranches of guaranteed senior notes (A1/A+/A+) that include three-year notes guided to print in the Treasuries plus 50 bps area and 10-year notes talked at the 95 bps spread area.

Meanwhile, BAE Systems plc (Baa2/BBB/BBB) is marketing two tranches of senior notes on Tuesday, including notes due Feb. 15, 2031 talked to price with a spread in the Treasuries plus 160 bps area and notes due Feb. 15, 2050 guided at the 195 bps spread area.

Danske Bank A/S also is on deck with two tranches of dollar-denominated fixed-rate notes (Baa3/A) during the day.

The company is offering three-year notes talked to price in the 130 bps over Treasuries area and six-year notes talked to print in the Treasuries plus 160 bps area.

Anglo American Capital plc plans to price two tranches of dollar-denominated senior notes (Baa2/BBB/BBB) during the session.

A tranche of 10-year notes is talked to price with a spread in the 230 bps over Treasuries area, while a 30-year note is guided to print in the Treasuries plus 290 bps area.

In addition to Valero, other energy supply is expected over the day.

Entergy Arkansas, LLC is offering $675 million of first mortgage bonds due June 15, 2051 (A2/A) with price talk in the Treasuries plus 145 bps area.

Sempra Energy intends to price $600 million of fixed-to-fixed reset rate junior subordinated notes due Feb. 1, 2051 (Baa3/BBB-/BBB-) on Tuesday. Price talk is in the 4% area.

Arizona Public Service Co. is offering $400 million of 30-year green senior notes (A2/A-/A) with price guidance at the Treasuries plus 150 bps area.

In other issuance expected, Johnson Controls International plc and Tyco Fire & Security Finance SCA are offering $625 million of 10-year green senior notes (Baa2/BBB+/BBB) following fixed income investor calls last week. Price talk is at the Treasuries plus 140 bps area.

Kimberly-Clark Corp. plans to bring $600 million of seven-year senior notes (A2/A) that are talked to print in the Treasuries 85 bps to 90 bps area.

Mitsubishi UFJ Financial Group, Inc. is marketing four-year senior notes (A1/A-/A) with price talk at the Treasuries plus 85 bps to 90 bps area.

MetLife, Inc. also expects to tap the primary market with new perpetual fixed-rate reset non-cumulative preferred stock on Tuesday. Initial price talk is in the 4.125% to 4.25% area.

In other supply expected, American Financial Group, Inc. is offering subordinated debentures (Baa2/BBB-) on Tuesday.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.