High-grade issuance misses forecast; Moody’s, Texas Instruments price; June supply eyed

By Cristal Cody

Tupelo, Miss., June 1 – Two issuers tapped the investment-grade bond market on Friday, bringing week-to-date volume to about $5.4 billion.

Syndicate sources had expected about $20 billion of bond issuance for the week.

During the session, Moody’s Corp. priced $300 million of three-year senior notes.

Texas Instruments Inc. placed a $200 million add-on to its 4.15% notes due May 15, 2048.

Supply over the week includes BB&T Corp.’s $1.5 billion two-tranche offering of notes on Thursday and about $3.4 billion of high-grade bonds on Wednesday from L3 Technologies, Inc., Southern California Edison Co., Dominion Energy, Inc. and MetLife Inc.

The markets were closed on Monday for the Memorial Day holiday and reported supply stayed quiet in the first session back on Tuesday.

Because of the light pricing action over the week, June’s deal pipeline is expected to be stronger than usual, according to BofA Merrill Lynch analysts.

“June is seasonally a slow month for supply with 8-year average volume of $72.3 [billion], or 6.6% of annual supply,” the analysts said in a note released Friday. “However, with only $5 [billion] of new issue supply this week due to Italy-induced global market weakness, much of this week's activity was likely postponed till next week, adding to the June pipeline.

“On top of that, there is still an overhang of M&A-related supply, as some M&A deals with expected June closing dates have not yet obtained debt financing.”

BofA Merrill Lynch analysts forecast about $90 billion to $100 billion of deal volume in June.

In economic data released earlier in the day, the Labor Department reported that 223,000 jobs were added in May, above analysts’ forecast of an 190,000 increase for the month.

The Markit CDX North American Investment Grade 30 index came in about 1 basis point to end the week at a spread of 65 bps.

Moody’s prices $300 million

Moody’s sold $300 million of 3.25% three-year senior notes (BBB+/BBB+) on Friday at 99.85 to yield 3.303%, or Treasuries plus 70 bps, according to an FWP filing with the Securities and Exchange Commission.

Citigroup Global Markets Inc., J.P. Morgan Securities LLC and BofA Merrill Lynch were the bookrunners.

New York City-based Moody’s is the parent company of credit ratings agency Moody’s Investors Service.

Texas Instruments taps bonds

Texas Instruments was in the primary market with a $200 million tap of its 4.15% notes due May 15, 2048 (A1/A+) on Friday at 103.052 to yield 3.973%, or a spread of 93 bps over Treasuries, according to an FWP filing with the SEC.

Texas Instruments first sold $1.3 billion of the notes on April 30 at 99.556 to yield 4.176%, or a spread of 107 bps over Treasuries. The total outstanding now is $1.5 billion.

Citigroup, Mizuho Securities USA Inc., Morgan Stanley & Co. LLC, Barclays, JPMorgan, BofA Merrill Lynch and MUFG were the bookrunners.

Texas Instruments is a Dallas-based semiconductor designer and manufacturer.

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