Investment-grade supply mostly quiet; high-grade inflows decline; Volkswagen, Barclays widen

By Cristal Cody

Tupelo, Miss., Nov. 15 – The high-grade primary market stayed mostly quiet on Thursday following DowDuPont Inc.’s $12.7 billion eight-part offering of senior notes in the previous session.

No corporate issuers came to market, while Nederlandse Waterschapsbank NV priced $1 billion offering of three-year notes tighter than talk in SSA supply.

The Federal Home Loan Bank System also announced in the morning that it priced $1.25 billion of new 10-year Global notes.

Investment-grade issuers have priced more than $18 billion of bonds week to date.

About $25 billion to $30 billion of supply was expected for the short market week, according to syndicate sources.

For the week ended Nov. 14, Lipper US Fund Flows reported inflows of $755 million for corporate investment-grade funds, down from inflows of $1.85 billion in the previous week.

New issues were mixed in the secondary market with volatility crimping performance of bonds including DowDuPont’s notes, according to market sources.

No secondary trading levels were seen Thursday afternoon on DowDuPont’s deal, while earlier, Svenska Handelsbanken AB’s 3.9% notes due Nov. 20, 2023 (Aa2/AA-/AA) were quoted about 5 basis points tighter than where the notes priced on Tuesday, sources said. The Stockholm-based bank sold $1.4 billion of the notes at a spread of 95 bps over Treasuries.

Marriott International Inc.’s senior notes (Baa2/BBB/) priced as part of a $1.2 billion three-part deal on Tuesday were seen trading about 5 bps to 10 bps wider than pricing levels. The Bethesda, Md.-based lodging company’s 4.65% notes due Dec. 1, 2028 eased to the 165 bps area, according to a market source. Marriott sold $300 million of the 10-year notes at a Treasuries plus 155 bps spread.

In other new issue trading, Volkswagen Group of America Finance LLC’s notes priced in an $8 billion seven-part Rule 144A and Regulation S deal on Nov. 7 have widened in the secondary market. The company’s 10-year notes were quoted more than 30 bps weaker than issuance on Thursday.

Barclays plc’s senior notes (Baa3/BBB/A) brought to the primary market in a $2.5 billion two-part deal on Nov. 7 also have softened since pricing on Nov. 7. The company’s fixed-to-floating-rate notes due Feb. 15, 2023 are trading more than 20 bps wider than issuance.

Meanwhile, American Express Co.’s senior notes (A3/BBB+/A) sold as part of a $3 billion three-part deal on Nov. 1 have tightened since pricing. The tranche of 4.2% notes due Nov. 6, 2025 traded about 7 bps better than issuance.

Also, Comcast Corp.’s senior notes (A3/A-/A-) priced as part of a $27 billion 12-tranche offering in October have traded heavily over the week after complaints from a trade group that represents smaller broadband, phone and video service providers. On Monday, the American Cable Association Inc. said in a statement that it asked the Justice Department’s antitrust division to investigate Comcast’s business practices, which President Donald Trump weighed in on via Twitter.

Comcast’s bonds traded mostly flat to weaker on Thursday.

The Markit CDX North American Investment Grade 31 index remained soft during the session and eased about 2 bps to a spread of 73 bps.

NWB sells $1 billion

Nederlandse Waterschapsbank (Aaa/AAA/) priced $1 billion of 3% senior notes due Dec. 21, 2021 on Thursday at mid-swaps plus 6 bps, or a spread of Treasuries plus 22.45 bps, according to a market source.

The notes were initially talked to price in the mid-swaps plus 7 bps area.

Daiwa Capital Markets Inc., Morgan Stanley & Co. LLC and TD Securities (USA) LLC were the bookrunners.

The local government funding agency is based in The Hague, the Netherlands.

Volkswagen widens

Volkswagen Group of America Finance’s 4.75% notes due Nov. 13, 2028 were quoted about 5 bps weaker in secondary trading on Thursday at 198 bps bid, according to a market source.

The company (A3/BBB+/) sold $1.25 billion of the 10-year notes on Nov. 7 at spread of 165 bps over Treasuries.

Volkswagen Group of America is a Herndon, Va.-based financing arm and subsidiary of Volkswagen Group of America, Inc.

Barclays softens

Barclays’ 4.61% fixed-to-floating-rate notes due Feb. 15, 2023 traded on Thursday at 187 bps bid, a market source said.

Barclays sold $1.75 billion of the notes on Nov. 7 at a spread of 160 bps plus Treasuries. The notes will convert Feb. 15, 2022 to a floating rate of Libor plus 140 bps.

The financial services company is based in London.

American Express firms

American Express’ 4.2% notes due Nov. 6, 2025 were quoted in the secondary market at 111 bps bid, a source said.

The company sold $750 million of the seven-year notes on Nov. 1 at a Treasuries plus 118 bps spread.

The credit card services company is based in New York.

Comcast notes ease

Comcast’s 4.7% notes due Oct. 15, 2048 eased 5 bps to trade wrapped around issuance at 150 bps bid on Thursday, according to a market source.

The $4 billion of 30-year bonds priced on Oct. 12 at a spread of 150 bps over Treasuries.

Comcast is a media and technology company based in Philadelphia.

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