Morning Commentary: BP, CSX, Owl Rock, Ally, utilities, Kommunalbanken eye primary

By Cristal Cody

Tupelo, Miss., Dec. 1 – December kicked off with investment-grade corporate and sovereign, supranational and agency issuers marketing bonds early Tuesday, sources report.

BP Capital Markets America Inc. plans to price new notes due June 4, 2051 (A1/A-) over the day.

Initial price talk is in the Treasuries plus 145 basis points area.

CSX Corp. is marketing $500 million of long 30-year senior notes (Baa1/BBB+) with price talk in the 112.5 bps over Treasuries area.

Energy issuers also are on deck.

Virginia Electric and Power Co. intends to price 30-year senior notes (A2/BBB+/A). Initial guidance on the notes is in the Treasuries plus 110 bps area.

Southern California Edison Co. is offering one-year floating-rate first and refunding mortgage bonds (A3/A-/BBB+) on Tuesday.

In other supply expected, Owl Rock Capital Corp. intends to price $400 million of senior notes due July 15, 2026 (Baa3/BBB-/BBB-). Initial price talk is in the Treasuries plus 350 bps area.

Prosus NV is marketing dollar-denominated senior notes due Feb. 8, 2051 (Baa3/BBB-) with price talk in the Treasuries plus mid-200 bps area over the day.

Principal Life Global Funding II is shopping new senior secured notes due Jan. 12, 2024 (A1/A+) that are backed by funding agreements on Tuesday.

The notes are talked to price in the Treasuries plus 45 bps area.

In addition, Ally Financial Inc. plans to tap its 1.45% senior notes due Oct. 2, 2023 in a $300 million add-on.

The company first sold $750 million of the notes (BBB-/BBB-) on Sept. 16 at 99.374 to yield 1.662%, or a spread of 150 bps over Treasuries.

Initial price talk is at the Treasuries plus 75 bps area.

SSA offering

In the SSA space, Kommunalbanken Norway (Aaa/AAA) launched a $1.5 billion Rule 144A and Regulation S offering of three-year notes early Tuesday at mid-swaps plus 4 bps, 2 bps tighter than initial talk.

Investment-grade corporate issuers priced $5.5 billion of bonds on Monday in the first full session after the Thanksgiving Day holiday.

About $15 billion to $20 billion of new high-grade issuance is expected this week, according to syndicate sources.

Looking at December’s volume, about $25 billion to $35 billion or more of investment-grade corporate bonds are forecast to price over the month.

In the secondary market, trading volume was heavy on Monday with $28.97 billion of high-grade corporate issues traded, compared to $21.06 billion of volume in the same period a week ago, according to Trace.

Market tone was mostly positive mid-morning on Tuesday with stock indices up 1% or more.

The Pimco Investment Grade Corporate Bond index rose 0.18% to $117.08.

The iShares iBoxx Investment Grade Corporate Bond ETF declined 0.29% to $137.81.

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