Morning Commentary: GlaxoSmithKline, Target, utilities to tap high-grade bond market

By Cristal Cody

Tupelo, Miss., March 18 – The high-grade primary market geared up early Monday for a busy session with issuers including GlaxoSmithKline Capital plc offering bonds.

The company plans to price four tranches of notes, including three fixed-rate tranches and one floating-rate slice that are guaranteed by parent company GlaxoSmithKline plc.

Also on deck, Target Corp. is marketing 10-year fixed-rate notes.

In addition, a handful of utility deals were in the works at the start of Monday’s session.

Kansas City Power & Light Co. is offering fixed-rate mortgage bonds.

Kentucky Utilities Co. plans to price an add-on to its 4.375% first mortgage bonds due Oct. 1, 2045.

The bonds were first issued in a $250 million offering on Sept. 28, 2015 at 99.917 with a yield of 4.38% and a spread of Treasuries plus 135 basis points.

Louisville Gas and Electric Co. also intends to price 30-year first mortgage bonds.

About $20 billion to as much as $30 billion of high-grade supply is expected by syndicate sources this week following more than $27 billion of issuance last week.

Based on data from 2011 through 2018, the third week of March typically sees $22 billion of high-grade supply, according to a BofA Merrill Lynch note released on Monday.

This week, market focus also is expected to turn to the Federal Reserve’s monetary policy meeting on Tuesday and Wednesday.

In other action, the high-grade secondary market ended Friday with corporate trading volume of $20 billion, according to Trace.

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