U.S. Bancorp prices $500 million; steady supply forecast; AbbVie notes tighten; BNG firms

By Cristal Cody

Tupelo, Miss., Sept. 14 – U.S. Bancorp tapped the high-grade primary market on Friday with a $500 million offering of three-year notes.

The deal brings investment-grade bond volume over the week to more than $30 billion.

Looking ahead to the upcoming week, market sources expect steady supply of about $25 billion to $30 billion.

Volume is expected to thin over the back half of the month following heavy issuance in the first two weeks when nearly $90 billion of bonds priced, sources said.

In the secondary market, new issues priced this week mostly traded better, according to market sources.

AbbVie Inc.’s $6 billion four-tranche offering of fixed-rate senior notes (Baa2/A-/) priced Thursday tightened 3 basis points to 7 bps in secondary trading.

Bank Nederlandse Gemeenten NV’s $2.5 billion Rule 144A and Regulation S offering of 3% notes due Sept. 20, 2023 sold in the previous session were quoted nearly 2 bps tighter on Friday.

The Markit CDX North American Investment Grade 30 index closed mostly flat at a spread of 56 bps.

U.S. Bancorp sells notes

U.S. Bancorp sold $500 million of 3.25% three-year medium-term senior notes at a spread of 43 bps over Treasuries on Friday, according to an FWP filing with the Securities and Exchange Commission.

The notes (A1/A+/AA-) priced at 99.921 to yield 3.278%.

U.S. Bancorp Investments, Inc. and UBS Securities LLC were the bookrunners.

Minneapolis-based U.S. Bancorp is a holding company and parent of U.S. Bank NA.

AbbVie firms

In secondary trading, AbbVie’s new 4.25% notes due Nov. 14, 2028 tightened to 135 bps bid, 133 bps offered, a source said Friday.

The $1.75 billion of notes priced on Thursday at a spread of 138 bps over Treasuries.

AbbVie’s 4.875% notes due Nov. 14, 2048 firmed to 176 bps bid, 173 bps offered in the secondary market.

The company sold $1.75 billion of the bonds in Thursday’s offering at a spread of 183 bps over Treasuries.

AbbVie is a biopharmaceutical company based in North Chicago, Ill.

BNG Bank improves

BNG Bank’s 3% notes Sept. 20, 2023 traded on Friday at 22.5 bps bid, 21.5 bps offered in the secondary market, a source said.

The bank (Aaa/AAA/AA+) priced $2.5 billion of the five-year notes on Thursday at a spread of Treasuries plus 24.1 bps.

The banking services company is based in The Hague.

High-grade inflows lead rise

Elsewhere, inflows to U.S. bond funds and ETFs accelerated to $4.83 billion this week from $2.41 billion a week earlier, led by higher inflows to the investment-grade space, Yuri Seliger, an analyst with BofA Merrill Lynch, said in a note released on Friday.

“Over the last two months, inflows to high grade were concentrated in short-term funds and ETFs,” Seliger said. “By contrast, this past week inflows [except] short-term were the largest since April. At the same time, inflows to short-term high grade instead declined relative to the prior week.”

Inflows to high grade, which includes corporates, Treasuries, agencies and mortgages, increased to $2.89 billion for the week ended Sept. 12 from $1.66 billion a week ago, according to the report.

Short-term inflows declined to $1.31 billion from $1.75 billion, while outside-of-short-term high-grade flows jumped to a $1.57 billion inflow following a $100 million outflow.

The increase in inflows was driven by ETFs, which are usually dominated by institutional investors, Seliger said.

Flows to high grade ETFs rose to a $2.18 billion inflow this week from a $180 million outflow in the previous week. However, inflows to high-grade funds declined to $700 million from $1.84 billion in the prior week, Seliger said.

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