High-grade primary wraps quiet week; short-term posts outflows; Banco Santander, HCP tighten

By Cristal Cody

Tupelo, Miss., June 21 – The investment-grade primary market stayed quiet over Friday’s session following a light supply week.

High-grade issuers priced about $10 billion of bonds over the week, compared to about $15 billion to $20 billion of supply expected by syndicate sources.

The upcoming week could see opportunistic issuers after spreads tightened following the Federal Reserve’s monetary policy meeting on Wednesday, sources said.

About $15 billion of supply is forecast for the week ahead.

New issues were mostly tighter in the secondary market on Friday.

Banco Santander, SA’s $2.5 billion of senior preferred debt securities (A2/A/A) priced in two tranches on Thursday traded about 2 basis points to 4 bps better than issuance.

HCP, Inc.’s $1.3 billion of notes (Baa1/BBB+/BBB) priced in two tranches on Thursday tightened about 7 bps to 8 bps on the bid side.

In other secondary trading, Fiserv, Inc.’s five- and 10-year tranches priced as part of a $9 billion four-part offering of senior notes (Baa2/BBB/) in the previous week were among the most actively traded high-grade issues.

Fiserv’s 3.5% notes due July 1, 2029 have improved more than 2 points since the start of the week.

AT&T Inc.’s 4.35% notes due March 1, 2029 continued to tighten over Friday’s session. The notes have firmed more than 15 bps over the week.

Verizon Communications Inc.’s 3.875% green senior notes due Feb. 8, 2029 were flat on the day but are about 10 bps better on the week.

High-grade credit spreads had firmed about 5 bps since the start of the week but softened on Friday. The Markit CDX North American Investment Grade 32 index eased more than 1 bp to a spread of 55 bps.

In other activity, investors purchased more stocks and fewer bonds for the past week ending Wednesday, according to a BofA Merrill Lynch global research note released on Friday.

Inflows to equities climbed to $16.69 billion, the largest inflow since March, from a $7.23 billion inflow a week earlier, credit strategist Yuri Seliger said.

Fixed income inflows fell to $4.06 billion for the week from $9.82 billion a week ago, “mostly on the back of weaker flows for government bonds and short-term high grade,” Seliger said.

Overall high-grade inflows declined to $3.28 billion from $4.91 billion in the prior week.

Short-term high-grade flows turned into a small $70 million outflow after a $1.31 billion inflow a week earlier.

“Note that we exclude two volatile funds from [our] data and one of them – a short-term fund – reported a large $1.34 [billion] outflow,” Seliger said.

Excluding short-term high-grade inflows decelerated modestly to $3.35 billion from $3.6 billion in the prior week.

High-grade inflows declined for funds, to $400 million from $1.66 billion, and ETFs, to $2.88 billion from $3.25 billion.

Banco Santander firms

Banco Santander’s 3.306% notes due June 27, 2029 improved to 126 bps bid, 123 bps offered in secondary trading, a market source said on Friday.

Banco Santander sold $1 billion of the 10-year notes on Thursday at a spread of 130 bps over Treasuries.

The banking services company is based in Madrid.

HCP notes tighten

HCP’s 3.25% notes due July 15, 2026 firmed to 132 bps bid, 128 bps offered in the secondary market, a source said.

The company sold $650 million of the seven-year notes on Thursday at a spread of 140 bps over Treasuries.

HCP’s 3.5% notes due July 15, 2029 tightened to 148 bps bid, 145 bps offered.

The 10-year notes priced in a $650 million tranche on Thursday at a Treasuries plus 155 bps spread.

Irvine, Calif.-based HCP is a real estate investment trust that invests primarily in real estate serving the health care industry.

Fiserv notes trade

Fiserv’s 2.75% notes due July 1, 2024 traded modestly softer on Friday in the 100.40 area after going out in the previous session at 100.46, according to a market source.

The notes started the week at 99.82.

Fiserv sold $2 billion of the five-year notes on June 7 at 99.832 to yield 2.786%, or a spread of 87.5 bps over Treasuries.

The company’s 3.5% notes due July 1, 2029 traded at 101.98 on Friday, compared to 100.38 at the start of the week.

The issue climbed to 101 on Wednesday and moved past the 102 area on Thursday.

The 10-year notes priced in a $3 billion tranche on June 7 at 99.832 to yield 3.52% and a Treasuries plus 137.5 bps spread.

Fiserv is a provider of financial services technology based in Brookfield, Wis.

AT&T tightens

AT&T’s 4.35% notes due March 1, 2029 headed out 4 bps tighter on Friday at 137 bps bid, a market source said.

The notes were quoted a week ago on June 14 at 154 bps bid.

AT&T sold $3 billion of the 10-year notes on Feb. 13 at a spread of Treasuries plus 170 bps.

The telecommunications company is based in Dallas.

Verizon firms

Verizon Communications’ 3.875% green senior notes due Feb. 8, 2029 were flat in the secondary market on Friday at 99 bps bid, a market source said.

The notes have tightened about 10 bps from where they were quoted on June 14 at 109 bps bid.

Verizon sold $1 billion of the notes (Baa1/BBB+/A-) on Feb. 5 at a spread of Treasuries plus 120 bps.

Verizon is a telecommunications company based in New York City.

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