Morning Commentary: High-grade supply soars; issuers on deck include Berkshire, eBay

By Cristal Cody

Tupelo, Miss., March 4 – Investment-grade issuers are wasting no time in making up for the quiet streak in issuance due to coronavirus pandemic fears with at least 14 issuers planning to tap the primary market on Wednesday, sources report.

The deals follow more than $6 billion of issuance on Tuesday in the heaviest supply seen since mid-February.

The primary market was quiet on Monday.

Corporate primary action on Tuesday is expected to include issuers Delta Air Lines Inc., Berkshire Hathaway Finance Corp., Southern California Edison Co., J.M. Smucker Co., Cigna Corp., Waste Connections, Inc., Healthcare Realty Trust Inc., eBay Inc., Avery Dennison Corp., L3Harris Technologies, Inc., Newmont Corp., John Deere Capital Corp. and Truist Financial Corp.

Delta Air Lines is offering $1 billion of pass through certificates due 2028 and 2029.

Berkshire Hathaway plans to sell $500 million of 10-year notes.

Southern California Edison expects to price new 10-year notes and an add-on to its 3.65% notes due Feb. 1, 2050.

J.M. Smucker is marketing $800 million of notes due 2030 and 2050.

Cigna plans to bring three tranches of notes due 2030, 2040 and 2050.

Waste Connections is offering $400 million of notes due April 1, 2050 with initial price talk at the Treasuries plus 180 basis points area.

Healthcare Realty is on deck with $300 million of 10-year notes that are initially talked to print with a spread in the Treasuries plus 175 bps area.

eBay is marketing two tranches of notes due 2025 and 2030.

Avery Dennison intends to sell $500 million of 10-year notes. Initial price talk is at the Treasuries plus 187.5 bps area.

L3Harris’ deal includes $250 million of three-year floating-rate notes that are talked to price at the Libor plus 75 bps area.

Newmont is offering 10-year notes.

John Deere Capital plans to bring two tranches of notes due 2023 and 2027 to the primary market on Wednesday.

Truist, which was created following the merger last year of Branch Banking & Trust Co. and SunTrust Banks, Inc., expects to price four tranches of notes. The deal includes three-year floaters, three-year fixed-rate notes, five-year fixed-rate notes and 10-year fixed-rate notes.

In addition, in the sovereign, supranational and agency market, the International Bank for Reconstruction and Development, or World Bank, plans to price $3.5 billion of five-year notes that are initially talked at the mid-swaps plus 10 bps area.

Up to about $15 billion of bond supply was forecast this week after volatility in the financial markets curtailed issuance last week.

The Federal Reserve cut the Federal Funds rate on Tuesday by 50 bps to a range of 1% to 1.25% on concerns that the coronavirus poses a risk to economic activity.

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