Lighter high-grade deal action forecast; Morgan Stanley firms; U.S. Bancorp mostly unchanged

By Cristal Cody

Eureka Springs, Ark., Jan. 20 – The high-grade bond markets stayed mostly quiet on Friday with the focus on the inauguration of president-elect Donald Trump and market reactions.

Primary action is expected to slow in the week ahead following robust supply month to date. Market sources forecast about $15 billion to $25 billion of investment-grade bond issuance in the upcoming week.

Smithfield Foods, Inc. announced plans on Friday to price a $1.4 billion offering of senior notes.

In secondary trading, Morgan Stanley’s notes (A3/BBB+/A) headed out better than issuance on Friday, with the long bond trading nearly 10 basis points tighter than where it came.

U.S. Bancorp’s 2.625% notes due 2022 traded flat on the bid side on Friday.

The Markit CDX North American Investment Grade index closed mostly unchanged at a spread of 66 bps.

Smithfield Foods plans deal

Smithfield Foods plans a $1.4 billion private Rule 144A- and Regulation S-eligible offering of senior notes (/BBB-/BBB), according to market sources and a company release on Friday.

The notes will be issued in tranches due 2020, 2022 and 2027.

The notes initially will be guaranteed on a senior unsecured basis by each of the company’s subsidiaries that is expected to become a borrower or a guarantor under its new senior credit facilities and, in the future, by each of its subsidiaries that guarantees obligations under certain material debt facilities or certain material debt securities of the company or any guarantor.

Smithfield Foods intends to use the proceeds from the proposed notes offering, together with cash on hand and borrowings under its credit facilities, to refinance its existing senior notes.

The meat processing company is based in Smithfield, Va.

Morgan Stanley firms

Morgan Stanley’s 3.625% notes due 2027 were quoted in secondary trading on Friday afternoon at 140 bps bid, 137 bps offered, according to a market source.

The notes priced in a $3 billion offering on Tuesday at a spread of Treasuries plus 143 bps.

Morgan Stanley’s 4.375% notes due 2047 traded tighter at 139 bps bid, 137 bps offered.

The notes were sold on Tuesday in a $2.25 billion tranche at a spread of Treasuries plus 148 bps.

The financial services company is based in New York City.

U.S. Bancorp mostly flat

U.S. Bancorp’s 2.625% medium-term senior notes due 2022 traded on Friday at 70 bps bid, 68 bps offered, a source said.

U.S. Bancorp sold $1.25 billion of the five-year notes (A1/A+/AA) on Thursday at a spread of Treasuries over 70 bps.

Minneapolis-based U.S. Bancorp is a holding company and parent of U.S. Bank NA.

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