Morning Commentary: Oracle, Sysco, TJX, Aflac, Ventas, Exelon, AEP crowd primary market

By Cristal Cody

Tupelo, Miss., March 30 – The investment-grade primary market is poised to continue heavy pricing action on Monday following record deal volume of more than $109 billion last week.

Several companies are marketing bonds that are expected to price over Monday’s session, sources report.

Oracle Corp. is on deck with six tranches of fixed-rate senior notes due 2025, 2027, 2030, 2030, 2050 and 2060.

Sysco Corp. is offering four tranches of senior notes that includes five-, 10-, 20- and 30-year tranches.

TJX Cos., Inc. plans to price four tranches of fixed-rate senior notes due 2025, 2027, 2030 and 2050.

British American Tobacco plc subsidiary B.A.T. Capital Corp. intends to price guaranteed fixed-rate notes due 2027, 2030 and 2050.

Aflac Inc. also plans to sell new 10-year senior notes. Initial price talk is in the Treasuries plus 340 basis points area.

Ventas Realty LP is in the day’s deal pipeline with new 10-year guaranteed senior notes initially talked at the Treasuries plus 400 bps area.

In addition, several energy companies are offering bonds.

Exelon Corp. intends to bring a two-part offering of fixed-rate notes to the primary market.

AEP Transmission Co. is marketing $525 million of 30-year fixed-rate senior notes with initial price talk in the Treasuries plus 275 bps to 287.5 bps area.

Oklahoma Gas & Electric Co. expects to price $300 million of 10-year fixed-rate senior notes.

Wisconsin Power & Light Co. is offering $350 million of 30-year fixed-rate debentures. The bonds are talked to price at the Treasuries plus 287.5 bps area.

Southern California Edison Co. plans to price a $400 million add-on to its 3.7% first and refunding mortgage bonds due Aug. 1, 2025. The bonds were first issued on Aug. 2, 2018 in a $300 million deal at 99.786 to yield 3.735%, or a spread of Treasuries plus 80 bps.

Meanwhile, Anglo American Capital plc is offering five- and 10-year fixed-rate notes on Monday. The five-year notes are talked at the Treasuries plus 525 bps area, and the 10-year notes are talked at the 525 bps spread area.

About $30 billion to as much as $60 billion of deal volume is expected this week, according to market sources.

March supply already totals more than $200 billion.

Deal volume is expected to slow in April as companies go into earnings reporting blackout periods, sources said.

High-grade supply has been heavy over the back half of March following Federal Reserve measures that include plans to buy back corporate bonds and U.S. government stimulus measures due to the coronavirus that has caused the closure of non-essential businesses.

On Sunday, president Donald Trump extended social distancing guidelines to April 30 as the number of U.S. infections grows daily and the death toll in Italy topped 10,000 over the weekend.

Financial market tone was positive at the start of the session with high-grade corporate bond exchange-traded funds and stocks up.

The iShares iBoxx Investment Grade Corporate Bond ETF climbed 1.36% early Monday.

The Dow Jones industrial average was up 1.81% over the morning.

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