Steady supply forecast for week ahead; Bank of America, Kroger firm; Wells Fargo mostly flat

By Cristal Cody

Tupelo, Miss., July 21 – Activity in the high-grade bond market stayed quiet on Friday following strong bank and financial issuance over the week from issuers including Morgan Stanley, Goldman Sachs Group Inc., Bank of America Corp., Mitsubishi UFJ Financial Group, Inc., JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co.

More than $40 billion of bonds priced in the first four sessions.

Market sources expect lower supply in the week ahead of about $20 billion to $25 billion with the Federal Reserve’s monetary policy meeting scheduled midweek.

In the secondary market, new bank and financial paper traded mostly flat to modestly tighter.

Bank of America’s $7 billion of senior notes (Baa1/BBB+/A) sold in four tranches on Tuesday tightened about 2 basis points to 5 bps.

Wells Fargo’s 2.625% senior notes due July 22, 2022 brought to market on Monday in a $3.75 billion deal traded mostly flat.

Kroger Co.’s $1.5 billion three-part offering of senior notes (Baa1/BBB/BBB) traded about 4 bps to 5 bps tighter in the secondary market.

The Markit CDX North American Investment Grade index ended Friday mostly unchanged at a spread of 57 bps.

Bank of America improves

Bank of America’s 2.369% notes due July 21, 2021 tightened to 80 bps bid, 77 bps offered in secondary trading, a source said.

The bank priced $2.5 billion of the fixed-to-floating-rate notes on Tuesday at par to yield a spread of Treasuries plus 85 bps. The notes will convert to a floating rate starting July 21, 2020 at Libor plus 66 bps.

The financial services company is based in Charlotte, N.C.

Wells Fargo steady

Wells Fargo’s 2.625% notes due July 22, 2022 were quoted in the secondary market on Friday at 80 bps bid, 78 bps offered, a source said.

Wells Fargo sold $3.75 billion of the notes (A2/A/AA-) on Monday at a spread of Treasuries plus 80 bps.

The financial services company is based in San Francisco.

Kroger new notes firm

Kroger’s 2.8% notes due Aug. 1, 2022 traded on Friday at 90 bps bid, 87 bps offered, a market source said.

Kroger priced $400 million of the five-year notes on Monday at a spread of Treasuries plus 95 bps.

The company’s 4.65% notes due Jan. 15, 2048 tightened to 176 bps bid, 173 bps offered.

Kroger sold $500 million of the bonds on Monday at a spread of 180 bps over Treasuries.

The company’s existing 4.45% notes due Feb. 1, 2047, priced on Jan. 17, 2017, were flat on the day at 170 bps bid, another market source said.

The Cincinnati-based grocery retailer sold $1 billion of the bonds at a spread of 150 bps over Treasuries.

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