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Morning Commentary: Investment-grade primary market quiet; Whole Foods, Kroger soften
By Cristal Cody
Tupelo, Miss., June 22 – The investment-grade primary market slowed on Thursday with no reported issuers in the deal pipeline following more than $10 billion of bond issuance in the previous session.
Falling oil prices have caused at least one issuer to stand down from tapping the primary market this week, a source said.
The three-month Libor yield was up 1 basis point to 1.29% on Thursday, according to a market source.
In the secondary market, Whole Foods Market Inc.’s 5.2% notes due Dec. 3, 2025 (Baa3/BBB-/) and Kroger Co.’s senior notes (Baa1/BBB/BBB) softened over the morning.
Whole Foods Market’s 5.2% notes due Dec. 3, 2025 traded early Thursday nearly 1 point weaker at 113.55 from 114.52 on Wednesday, according to a market source. The notes traded as high as 115.10 on Friday when Amazon.com., Inc. announced plans to acquire Whole Foods for $13.7 billion, or $42.00 per share, in cash.
The Austin, Texas-based natural and organic foods grocer sold $1 billion of the notes on Nov. 30, 2015 at 99.861 to yield 5.218% and a Treasuries plus 300 bps spread.
Kroger’s 4.45% notes due Feb. 1, 2047 weakened modestly to 98.12 early Thursday from where the notes went out on Wednesday at 98.27, a source said. The notes traded as high as 102.04 on June 14 before the Amazon.com. and Whole Foods acquisition was announced.
The Cincinnati-based grocery retailer sold $1 billion of the bonds on Jan. 17 at 99.867 to yield 4.458% and a spread of 150 bps over Treasuries.
Overall secondary trading volume on Wednesday totaled $17.46 billion, compared to $18.55 billion on Tuesday and $12.99 billion on Monday, according to Trace.
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