High-grade primary action thins; Royal Bank of Canada sells two tranches; World Bank prices

By Cristal Cody

Tupelo, Miss., Oct. 21 – Investment-grade supply remained light on Wednesday but included new bank issuance.

Royal Bank of Canada priced $2.25 billion of three-year senior medium-term bail-inable notes (A2/A/AA) in two tranches.

The deal included $1 billion of three-year floating-rate notes and $1.25 billion of three-year fixed-rate notes.

In other issuance, Wells Fargo & Co. (A2/BBB+/A+) sold $1.17 billion of 4.7% $25-par preferred stock, better than guidance in the 4.75% to 4.875% area, a source said.

Also on Wednesday, the International Bank for Reconstruction and Development, or World Bank, priced $6 billion of five-year global sustainable development bonds due Oct. 28, 2025 (Aaa/AAA/) 1 basis point tighter than talk.

The deal attracted final orders of more than $9 billion with nearly 180 investors in the mix, giving World Bank its “second-largest ever orderbook,” World Bank vice president and treasurer Jingdong Hua said in a news release.

Also, the issue is the second-largest sovereign, supranational and agency dollar-denominated benchmark issued in 2020, only behind World Bank’s $8 billion of 0.625% sustainable development bonds due April 22, 2025 that priced on April 15, according to Ben Adubi, head of SSA syndicate at Morgan Stanley.

World Bank saw a strong offering outcome, “capitalizing on a calm period in the market,” Adubi said in the release.

In other supply on Wednesday, the Federal Home Loan Bank System priced $1 billion of new two-year Global notes.

Investment-grade corporate and sovereign, supranational and agency supply totals about $25 billion week to date and includes about $15 billion of corporate volume.

About $15 billion of corporate supply was expected by market participants this week.

Volume was heaviest on Monday when $8 billion of bonds were priced.

T-Mobile tightens

Supply this week so far has been led by T-Mobile U.S. Inc. subsidiary T-Mobile USA, Inc.’s $4.75 billion Rule 144A and Regulation S four-tranche offering of new and reopened senior secured notes (Baa3/BBB-/BBB-) that priced on Monday.

T-Mobile’s notes have firmed about 4 bps to 10 bps in secondary trading, a market source said.

The company’s new 2.25% notes due Nov. 15, 2031 improved to 144 bps bid.

T-Mobile priced $1 billion of the 2.25% notes at a Treasuries plus 148 bps spread.

Initial talk was in the 175 bps spread area.

T-Mobile’s $1 billion tranche of 3.6% notes due Nov. 15, 2060 tightened 10 bps in the secondary market to 200 bps bid.

The 40-year notes priced with a Treasuries plus 205 bps spread, compared to talk in the 230 bps spread area.

Market tone was mixed in the high-grade space over the day.

The Markit CDX North American Investment Grade 35 index closed modestly tighter at a spread of 57.11 bps.

The PIMCO Investment Grade Corporate Bond index ended off 0.14% at 114.55.

The iShares iBoxx Investment Grade Corporate Bond ETF softened 0.16% to $134.58.

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