Morning Commentary: Supply improves; Darden, McKesson, Lincoln, Kirby, Sweden eye deals

By Cristal Cody

Tupelo, Miss., Feb. 7 – The high-grade deal pipeline filled quickly early Wednesday with several bond issuers expected to tap the primary market over the session after light supply in the first two days of the week.

Darden Restaurants, Inc., McKesson Corp., Lincoln National Corp. and Kirby Corp. announced details of bond offerings.

Also on Wednesday, the Kingdom of Sweden (Aaa/AAA/AAA) plans to price a Rule 144A and Regulation S benchmark-sized offering of notes due Feb. 15, 2021, according to a market source.

The notes were initially talked to price with a spread in the mid-swaps flat area.

Barclays, Citigroup Global Markets and HSBC are the bookrunners.

Coming up on Thursday, the Federal Home Loan Bank System announced it intends to price new two-year global notes.

Deal action was thin on Monday and Tuesday with heavy volatility in stocks and Treasuries.

Credit spreads widened on Monday before improving late Tuesday.

“Not surprisingly in this environment credit spreads were very volatile during the day and trading at times much wider before closing generally speaking mixed to a couple of bps wider,” according to a BofA Merrill Lynch research note released on Wednesday.

The Markit CDX North American Investment Grade 29 index closed on Monday 4 bps wider and tightened 2 bps to close on Tuesday at a spread of of 53.25 bps.

While investment-grade supply was thin on Tuesday, secondary trading was heavy with $23.88 billion of bonds traded, up from $14.94 billion on Monday, according to Trace data.

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