Pre-holiday investment-grade supply quiets; credit spreads firm; Takeda notes mostly better

By Cristal Cody

Tupelo, Miss., July 1 – High-grade primary action quieted on Wednesday with no reported issuers offering bonds over the session.

Issuance is likely finished for the week with the markets set to close early at 2 p.m. ET on Thursday and remain closed until Monday for the Independence Day holiday, a source said.

Supply week to date totals about $15 billion, in line with the $10 billion to $15 billion of volume expected by market participants for the week.

Volume was strong on Monday with $12.5 billion of issuance led by Takeda Pharmaceutical Co., Ltd.’s $7 billion four-part offering of senior notes (Baa2/BBB+/) and Sumitomo Mitsui Financial Group Inc.’s $3 billion two-tranche sale of senior notes (A1/A-/).

On Tuesday, $2.4 billion of notes were priced from issuers including Societe Generale SA, Mondelez International, Inc. and Guardian Life Global Funding.

Investment-grade supply is expected to decline in July to about $100 billion or less, down from more than $184 billion of issuance in June.

In other action on Wednesday, St. Petersburg, Fla.-based electronic product solutions company Jabil Inc. (Baa3/BBB-/BBB-) held fixed income investor calls, a market source said.

BNP Paribas Securities Corp., Citigroup Global Markets Inc., Mizuho Securities USA LLC and SMBC Nikko Securities America Inc. are the arrangers.

Market tone was modestly better over the third quarter’s start on Wednesday as participants digested the minutes from the Federal Reserve June 9-10 monetary policy meeting.

The iShares iBoxx Investment Grade Corporate Bond ETF, which finished Tuesday up 0.28% at 134.50, improved 0.4% to 134.72.

The PIMCO Investment Grade Corporate Bond Index closed the day up 0.41% at 114.46 after ending Tuesday up 0.18%.

Investment-grade credit spreads firmed about 1 basis point during the session.

The Markit CDX North American Investment Grade 33 index closed the day at a spread of 74.66 bps, about 6 bps tighter week to date.

Takeda mostly stronger

In the secondary market, new issues priced this week are trading mostly better, sources said.

Takeda’s $7 billion of registered senior notes (Baa2/BBB+/) priced in four tranches on Monday improved about 4 bps to 9 bps in secondary trading after pricing.

The notes were mostly better across the tranches in heavy trading on Wednesday.

Takeda’s $2.5 billion of 2.05% notes due March 31, 2030 climbed more than 1 point over the day to 101.24.

The notes were priced at 99.804 to yield 2.072%, or a spread of Treasuries plus 145 bps.

Takeda’s 3.025% notes due July 9, 2040 also traded over 1 point higher at 102.82 going out.

The $1.5 billion tranche of 20-year notes priced at par to yield a spread of 165 bps over Treasuries.

Takeda’s 3.175% notes due July 9, 2050 were the exception over the day and headed out softer at 100.48 from 100.86 on Tuesday.

The company sold $2 billion of the 30-year notes Monday at par to yield a 180 bps over Treasuries spread.

Takeda’s 3.375% notes due July 9, 2060 rose more than 2 points in secondary trading on Wednesday to 101.96.

The issue priced in a $1 billion tranche at par to yield a spread of 200 bps over Treasuries.

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