Morning Commentary: IG primary slows; Sumitomo pricing emerges; FHLB add-on on tap

By Rebecca Melvin

New York, Sept. 11 – As predicted, new issuance of investment-grade corporate bonds slowed on Wednesday.

Volume tapered off this week following record volume last week and continuing flow on Monday and Tuesday.

For Wednesday’s session, pricing details emerged on a couple of deals that were on the radar, including Sumitomo Mitsui Financial Group Inc. and PerkinElmer Inc., and Federal Home Loan Bank System announced that it plans to price a $600 million add-on to its existing 3.25% notes due 2028.

Sumitomo, the banking and financial company based in Tokyo, priced $500 million of 3.202% 10-year subordinated notes at par on Tuesday for a spread over Treasuries of 148 basis points.

Waltham, Mass.-based tech firm PerkinElmer priced $850 million of 3.3% 10-year senior notes at 99.67 for a spread over Treasuries of 162.5 bps.

U.S. Treasuries were little changed in the early going on Wednesday after slipping in recent sessions. The yield on the benchmark 10-year Treasury stood at 1.729%, which was essentially unchanged.

In economic news, U.S. producer prices rose unexpectedly last month, and underlying producer prices rebounded, but the data wasn’t expected to change expectations regarding whether the Federal Reserve will cut interest rates again next week.

The Labor Department said its producer price index edged up 0.1% in August, following a 0.2% gain in July. In the 12 months through August, the PPI advanced 1.8%.

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