High-grade primary quiets; thin pre-holiday supply eyed; SEB mixed; Royalty Pharma tightens

By Cristal Cody

Tupelo, Miss., Aug. 28 – Investment-grade market activity was quiet with no reported issuers offering bonds over Friday’s session.

Deal volume quieted on Thursday at the start of the Federal Reserve Bank of Kansas City’s two-day virtual economic policy symposium.

High-grade corporate supply totaled about $17 billion over the week, in line with the $15 billion to $20 billion of volume expected.

Sovereign, supranational and agency issuers also priced $10 billion of bonds this week.

Looking ahead to next week, little supply is expected in front of the Labor Day holiday in what may be the quietest session seen this summer, according to syndicate sources.

Anywhere from zero to up to about $5 billion of deal volume is anticipated for the week ahead.

In September, syndicate sources are forecasting about $110 billion to as much as $165 billion of supply during the month.

Credit spreads firm

New issues priced over the week were mostly stronger in secondary trading, though some bonds had leaked wider by late in the week, sources report.

Skandinaviska Enskilda Banken AB’s $2 billion of senior notes (Aa2/A+/AA-) priced in three tranches on Tuesday were wrapped around issuance to about 1 basis point better going out on Friday.

The company’s $600 million of 0.85% notes due Sept. 2, 2025 were unchanged from issuance at 58 bps bid, 53 bps offered.

The notes priced at a 58 bps over Treasuries spread, tighter than talk in the 80 bps over Treasuries area.

Royalty Pharma plc’s $6 billion six-tranche Rule 144A and Regulation S offering of senior notes (Baa3/BBB-/BBB-) priced on Monday traded Friday about 13 bps to nearly 25 bps tighter on the bid side.

The company’s 2.2% notes due Sept. 2, 2030 firmed to 165 bps bid, 161 bps offered.

Royalty Pharma sold $1 billion of the 10-year notes at a Treasuries plus 180 bps spread.

Initial price talk was at the 205 bps over Treasuries spread area.

Market tone in the high-grade space stayed positive on Friday.

The Markit CDX North American Investment Grade 33 index tightened nearly 1 bp over the day to close at a spread of 66.86 bps.

The iShares iBoxx Investment Grade Corporate Bond ETF rose 0.3% to 135.00.

The PIMCO Investment Grade Corporate Bond index improved 0.37% to 115.04 at closing.

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