Light supply eyed for February kickoff; credit spreads widen; new issues mixed; TPG firms

By Cristal Cody

Tupelo, Miss., Jan. 31 – The investment-grade primary market stayed quiet over Friday’s session as global focus turned to the United Kingdom’s official exit from the European Union, capping a week of more than $10 billion of bond volume.

Supply fell short of initial market forecasts of about $20 billion to $25 billion of issuance for the week.

Overall January volume has been strong with investment-grade supply of $127.38 billion from 132 issues, near the $130.98 billion of issuance from 126 issues in the same period last year, according to Prospect News data.

Deal volume is expected to remain light in the week ahead with about $15 billion to $20 billion of supply eyed by syndicate sources.

February volume is forecast to total about $90 billion to $100 billion for the month.

The Markit CDX North American Investment Grade 33 index widened more than 3 basis points to close Friday at a spread of 50.6 bps.

In the secondary market, new investment-grade issues were mixed during the session.

Union Pacific Corp.’s $3 billion four-tranche offering of senior notes (Baa1/A-/) that led the week’s deal volume traded flat to about 7 bps wider.

Credit Suisse AG, New York Branch’s $2 billion of floating-rate senior notes due Feb. 4, 2022 priced in the previous session was wrapped around issuance.

TPG Specialty Lending Inc.’s 3.875% notes due Nov. 1, 2024 reopened on Wednesday improved about 7 bps in the secondary market.

Elsewhere in secondary trading, Exxon Mobil Corp.’s notes (Aaa/AA+) were mixed after the company posted fourth quarter earnings on Friday that missed forecasts, a source said.

Hershey Co.’s senior notes (A1/A/) were flat on the day after the candy maker posted strong fourth quarter profits on Thursday.

Verizon Communications Inc.’s bonds (Baa1/BBB+/A-) were mixed following the company’s slightly weaker-than-expected fourth quarter earnings released Thursday.

Verizon’s 3.875% green senior notes due Feb. 8, 2029 eased about 2 bps to 87 bps bid on Friday, a source said.

The telecommunications company sold $1 billion of the notes on Feb. 5, 2019 at a spread of Treasuries plus 120 bps.

Union Pacific softens

Union Pacific’s new 2.4% notes due Feb. 5, 2030 eased to 83 bps bid, 80 bps offered in secondary trading, a market source said.

Union Pacific sold $750 million of the 10-year notes on Tuesday at a Treasuries plus 80 bps spread.

The tranche was initially talked to price in the 95 bps to 100 bps area.

Union Pacific’s $1 billion of 3.25% notes due Feb. 5, 2050 softened to 118 bps bid, 114 bps offered.

The notes priced at a spread of 115 bps over Treasuries, compared to initial guidance in the 130 bps to 135 bps spread area.

The railroad transportation company is based in Omaha.

Credit Suisse steady

Credit Suisse AG, New York Branch’s floating-rate senior notes due Feb. 4, 2022 (A1/A+) were seen at SOFR plus 45 bps bid, 42 bps offered in the secondary market on Friday, a source said.

The issue priced Thursday in a $2 billion tranche at par to yield SOFR plus 45 bps, tighter than initial talk in the SOFR plus high 50 bps area.

The New York branch is part of Zurich-based financial services company Credit Suisse Group AG.

TPG Specialty tightens

TPG Specialty Lending’s 3.875% notes due Nov. 1, 2024 (Baa3/BBB-/BBB-) traded Friday at 188 bps bid, 185 bps offered, a market source said.

The company priced a $50 million add-on to the issue on Wednesday at 102.075 to yield 3.389% and a spread of 195 bps over Treasuries.

The notes were originally priced in a $300 million issue on Oct. 25, 2019 at 99.032 to yield 4.091% and a spread of 245 bps over Treasuries. The total outstanding is now $350 million.

TPG Specialty Lending is a Fort Worth, Texas-based specialty finance company focused on lending to middle-market companies.

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