Morning Commentary: Magellan Midstream, Consumers Energy, Freddie Mac in primary

By Cristal Cody

Tupelo, Miss., Dec. 2 – Investment-grade deal volume began to slow on Wednesday with just a handful of reported issuers, while others are gauging the market with fixed income investor calls over the day, sources report.

Magellan Midstream Partners, LP is offering a $300 million tap of its 3.95% senior notes due March 1, 2050 (Baa1/BBB+) on Wednesday.

The company first sold $500 million of the notes on Aug. 8, 2019 at 99.91 to yield 3.955%, or a spread of 172 basis points over Treasuries.

Consumers Energy Co. plans to price new first mortgage bonds due June 1, 2023 (Aa3/A/A+) with proceeds slated to repay all or a portion of a $300 million term loan, along with general corporate purposes.

In other primary action, Freddie Mac plans to price a benchmark size offering of new three-year Reference Notes.

Elsewhere on Wednesday, a couple of high-grade companies are conducting fixed income investor calls.

Juniper Networks, Inc. (Baa2/BBB) is holding fixed income investor calls for a possible bond offering.

Also on Wednesday, Qualcomm Inc. (A2/A-) is holding fixed income investor call updates.

Deal volume totals nearly $13 billion week to date following $5.5 billion of supply on Monday and more than $8 billion of corporate and sovereign, supranational and agency bonds sold on Tuesday.

About $15 billion to $20 billion of supply is expected by market participants for the week.

Owl Rock tightens

High-grade secondary market volume has been strong week to date with new issues trading mostly tighter, sources note.

Secondary volume included $26.22 billion of bonds traded on Tuesday, down slightly from the $28.97 billion of volume on Monday, according to Trace.

Owl Rock Capital Corp.’s upsized $1 billion of 3.4% senior notes due July 15, 2026 (Baa3/BBB-/BBB-) that priced on Tuesday firmed to 301 bps bid in the secondary market.

The notes, upsized from an initial $400 million offering, priced at a spread of Treasuries plus 320 bps.

Price talk was in the Treasuries plus 350 bps area.

High-grade market tone, along with equities, was soft over the morning.

The Pimco Investment Grade Corporate Bond index fell 0.09% to $116.38.

The iShares iBoxx Investment Grade Corporate Bond ETF declined 0.39% to $137.14.

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