Summer lull in full swing; Dollar General improves, while Family Dollar trades lower

By Aleesia Forni and Cristal Cody

Virginia Beach, Aug. 22 – A quiet summer week ended on Friday with no new deals pricing, as the market focused on Federal Reserve Chair Janet Yellen’s speech at the economic symposium in Jackson Hole, Wyo.

Wednesday’s Federal Open Market Committee minutes also contributed to the slower pace of the primary.

The week saw roughly $9.1 billion of investment-grade paper price, due largely to Thursday’s $4.5 billion three-part trade from Bank of America Corp.

Supply topped what sources had expected to be around a $5 billion week.

In other news this week, Lipper reported inflows of $1.02 billion into corporate investment-grade funds for the week ended Aug. 20, down slightly from last week’s $1.133 billion of inflows.

A similar pace of issuance is expected for the week ahead, with sources not expecting activity to resume until after the Labor Day holiday weekend.

Canadian primary activity remained quiet with one deal from Enbridge Gas Distribution Inc. brought over the week, though bank and financial paper offerings may pick up in the weeks ahead, according to a market source on Friday.

“Royal Bank had very strong earnings this morning, and other banks report next week, so we could see some issuance as they come out of blackout,” the source said. “A lot of investors are expecting issuance from the banks, and there has been some secondary selling of deposit notes in anticipation of that.”

Investment-grade bond spreads headed out weaker following talks by Federal Reserve chairman Janet Yellen and European Central Bank president Mario Draghi at the annual Jackson Hole, Wyo., bankers meeting, sources said.

The Markit CDX North American Investment Grade series 22 index eased 2 basis points to a spread of 58 bps.

Family Dollar Stores, Inc.’s 5% senior notes due 2021 traded lower over the day, a market source said.

The discount retailer rejected Dollar General Corp.’s $9.7 billion cash takeover bid on Thursday and reiterated support for a merger with Dollar Tree Inc., which plans to acquire the discount retailer for $8.5 billion in cash and stock.

Dollar General’s 3.25% senior notes due 2023 improved in secondary trading over the session, according to a market source.

Family Dollar lower

Family Dollar Stores’ 5% notes due 2021 fell to 103.82 in trading on Friday, according to a market source.

The notes were quoted in Thursday’s session at 104.75 offered.

Family Dollar brought a $300 million offering of the notes on Jan. 25, 2011 at 99.494 to yield 5.065%.

The discount retail company is based in Matthews, N.C.

Dollar General better

Dollar General’s 3.25% senior notes due 2023 climbed to 93.13 on Friday from 91.125 offered in the previous session, a market source said.

Dollar General sold $900 million of the notes on April 8, 2013 at 99.737 to yield 3.281%.

The discount retailer is based in Goodlettsville, Tenn.

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