Morning Commentary: High-grade supply resumes; B.A.T., T-Mobile, Blackstone on tap

By Cristal Cody

Tupelo, Miss., Sept. 22 – Numerous investment-grade bond issuers moved forward to tap the primary market on Tuesday after volume came to a standstill on Monday, sources reported.

British American Tobacco plc subsidiary B.A.T. International Finance plc intends to price five tranches of senior notes (Baa2/BBB+) on Tuesday in conjunction with a tender offer of up to $2 billion for certain outstanding dollar-, euro- and sterling-denominated bonds.

The deal includes a tranche of notes due March 25, 2026 talked to price in the Treasuries plus 170 basis points area, notes due March 25, 2028 guided to price with a Treasuries plus 210 bps area spread, notes due March 25, 2031 talked at the 230 bps spread area, notes due Sept. 25, 2040 talked at the 270 bps over Treasuries area and notes due Sept. 25, 2050 talked to print at the 290 bps spread area.

T-Mobile U.S. Inc. subsidiary T-Mobile USA, Inc. is marketing four tranches of senior secured notes (Baa3/BBB-/BBB-) in a Rule 144A and Regulation S offering on Tuesday.

The deal includes new notes due Feb. 15, 2041, talked at the 190 bps spread area and new notes due Feb. 15, 2051 that are talked at the 215 bps spread area.

T-Mobile also plans to tap its existing 2.05% notes due Feb. 15, 2028 and its 2.55% notes due Feb. 15, 2031. The 2028 add-on is guided to price at the Treasuries plus 145 bps area, while the 2031 reopening is talked to price at the 165 bps spread area.

Blackstone Holdings Finance Co. LLC is on deck with two tranches of guaranteed senior notes (A+/A+) in a Rule 144A and Regulation S deal. A tranche of notes due March 30, 2031 is talked to price with a spread in the 125 bps over Treasures area. Blackstone is marketing 30-year notes talked at the 175 bps spread area.

Other issuers expected on Tuesday include Bank of America Corp., which is marketing five-year green medium-term fixed-to-floating rate senior notes due (A2/A-/A+) at the 90 bps over Treasuries area.

Xcel Energy Inc. is offering $500 million of three-year fixed-rate senior notes (Baa1/BBB+/BBB+). Initial price talk is in the Treasuries plus 60 bps area.

San Diego Gas & Electric Co. plans to bring a $500 million offering of 10-year first mortgage bonds (A2/A/A) to the primary market. Price guidance is at the 135 bps spread area.

Advance Auto Parts, Inc. is on deck with $300 million of seven-year guaranteed notes (Baa2/BBB-) that are guided to print in the 185 bps over Treasuries area.

Also, Kemper Corp. is marketing 10-year senior notes (Baa3/BBB-/BBB-) on Tuesday with price guidance at the 200 bps to 212.5 bps over Treasuries area.

In other primary action, DTE Energy Co. plans to sell $150 million of $25-par 60-year junior subordinated debentures (Baa3/BBB-) that are guided at the 4.375% area.

In addition, Swedish Export Credit Corp. expects to bring new dollar-denominated three-year global notes (Aa1/AA+) to the primary market over the day.

Initial price talk is in the mid-swaps plus 15 bps area.

The primary market stayed quiet on Monday as tone softened with stocks down.

About $30 billion to $35 billion of deal volume is expected by market participants this week.

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