High-grade supply thin; Sterling upsizes; corporate inflows heavy; Welltower, Charter improve

By Cristal Cody

Tupelo, Miss., Dec. 12 – Investment-grade bond supply is winding down for the year with just one deal reported in the primary market on Thursday.

Sterling Bancorp priced an upsized $275 million of 10-year registered fixed-to-floating-rate subordinated notes.

A possible bond offering also is being eyed from Reinsurance Group of America, Inc., which held fixed income investor calls on Monday and Tuesday, a market source said.

J.P. Morgan Securities LLC and Wells Fargo Securities LLC were the arrangers.

Otherwise, little new issue supply is expected to hit the primary market for the rest of the year, market sources report.

Investment-grade issuers have priced more than $4.5 billion of bonds week to date. Market sources expected volume of about $5 billion to $10 billion for the week.

Corporate investment-grade funds inflows more than doubled over the past week ended Wednesday to $4.61 billion from $2.23 billion in the previous week and up from $4.55 billion in the prior week, according to Lipper US Fund Flows on Thursday.

The Markit CDX North American Investment Grade 33 index closed the day nearly 2 basis points tighter at a spread of 47.8 bps.

Credit spreads tightened and Treasuries sold off following reports that President Trump agreed to a trade agreement that delays additional tariffs on Chinese imports set to go into effect on Sunday.

Market participants also were keeping an eye on the United Kingdom elections held Thursday.

In the secondary market, new issues were mixed but mostly tighter than issuance.

Steel Dynamics, Inc.’s 3.45% senior notes due April 15, 2030 (Baa3/BBB-/BBB) priced on Monday have improved 10 bps from issuance to the 155 bps area, a source said.

Steel Dynamics sold $600 million of the notes at 99.736 to yield 3.481% and a Treasuries plus 165 bps spread. Price guidance was in the 175 bps spread area, plus or minus 5 bps.

Welltower Inc.’s $500 million of 2.7% green senior notes due Feb. 15, 2027 (Baa1/BBB+/BBB+) priced on Monday were seen in the previous session 6 bps better than issuance, a market source said.

The company priced the notes at 99.893 to yield 2.716% and a spread of 95 bps over Treasuries.

Initial talk was in the Treasuries plus 120 bps spread area.

In other secondary trading, bonds in the telecommunications sector were mostly better on the day.

Charter Communications, Inc.’s bonds traded flat to about 6 bps tighter during the session. The company’s 4.8% senior secured notes due March 1, 2050 reopened in the previous week tightened more than 5 bps on Thursday.

Sterling sells notes

Sterling Bancorp priced an upsized $275 million of 10-year registered fixed-to-floating-rate subordinated notes (expected ratings Kroll: BBB) on Thursday at par to yield 4%, according to a news release.

The rate on the notes will reset Dec. 30, 2024 to a floating rate of SOFR plus 253 bps.

The deal was upsized from $200 million.

Sandler O’Neill + Partners, LP, Keefe, Bruyette & Woods and U.S. Bancorp Investments Inc. were the bookrunners.

Sterling Bancorp is a New York-based parent holding company of Sterling National Bank.

Charter tightens

Charter Communications’ 4.8% senior secured notes due March 1, 2050 (Ba1/BBB-/BBB-) firmed more than 5 bps over the session to the 230 bps bid area, according to a market source.

Charter priced a $1.3 billion add-on to the issue on Dec. 2 at 101.964 to yield 4.677%, or a spread of Treasuries plus 240 bps via subsidiaries Charter Communications Operating, LLC and Charter Communications Operating Capital Corp.

Charter originally sold the notes in a $1.5 billion offering on Oct. 15 at 99.436 to yield 4.836% and a spread of Treasuries plus 260 bps. The total outstanding is now $2.8 billion.

The broadband communications company is based in Stamford, Conn.

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