Morning Commentary: Ford, Texas Instruments, DTE Electric on tap; April may post supply record

By Cristal Cody

Tupelo, Miss., April 30 – Investment-grade issuers ramped up deal action early Monday with several offerings in the works.

Ford Motor Credit Co. LLC is marketing fixed- and floating-rate notes.

Kansas City Southern plans to sell guaranteed senior notes.

Texas Instruments Inc. is marketing a note deal.

DTE Electric Co. also intends to price general and refunding mortgage bonds.

While new bond issuance thinned in the latter part of the previous week, overall investment-grade bond volume has been heavy in April, BofA Merrill Lynch analysts said in a note released on Monday.

With $115.2 billion of high-grade bonds priced so far in April and one business day remaining in the month, “we are on track to set a new supply record for the month,” the analysts said.

About $25 billion to $30 billion of total supply is expected by market sources for the week.

Heavy deal volume also is forecast in May, including the potential for funding for debt-financed mergers set to close by summer, market sources report.

About $130 billion to as much as $160 billion of issuance is expected by syndicate sources for the upcoming month.

Telecom bonds mixed

In the secondary market, Friday ended with $14.23 billion of high-grade bonds traded, according to Trace.

Bonds in the telecommunications sector were mixed in light secondary trading over the morning following Sunday’s announcement that Sprint Corp. and T-Mobile USA Inc. plan to merge in an all-stock transaction.

AT&T Inc.’s 3.9% notes due Aug. 14, 2027 (Baa1/BBB+/A-) were 4 cents better at 101.10 early Monday, a source said.

Dallas-based AT&T sold $5 billion of the notes on July 27, 2017 at 99.827 to yield 3.92% and a spread of 160 basis points over Treasuries.

The company is fighting an antitrust suit from the Justice Department to block its $85.4 billion cash and stock acquisition of Time Warner Inc.

Time Warner’s 2.95% notes due July 15, 2026 (Baa2/BBB/BBB+) opened softer at 91.46 in thin secondary trading from 91.59 on Friday, according to the market source.

The New York-based media and entertainment company sold $800 million of the notes on May 5, 2016 at 98.70 to yield 3.1%, or a spread of Treasuries plus 135 bps.

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