High-grade quiets after financial supply; deal pickup eyed; bank paper firms; Charter up

By Cristal Cody

Tupelo, Miss., Oct. 18 – The high-grade bond market stayed quiet on Friday following more than $11 billion of corporate issuance over the week.

About $10 billion to $15 billion of supply was anticipated by market sources for the Columbus Day holiday-shortened week.

Volume has been led this week by bank supply from issuers including Bank of America Corp., Bank of New York Mellon Corp., PNC Bank, NA and Bank of Montreal.

In addition this week, $5 billion of high-grade sovereign, supranational and agency bonds were priced.

Looking ahead to the upcoming week, volume may pick up with syndicate sources forecasting about $15 billion to $20 billion of supply.

In other market action, a funding deal may be on the horizon from Canada’s Sienna Senior Living Inc., which announced on Friday that it had received an investment-grade rating of BBB for senior debentures from DBRS.

“An investment-grade credit rating from DBRS may provide Sienna with opportunities to access new sources of capital, and allows for further financial flexibility in achieving its growth strategy and strategic goals,” Lois Cormack, president and chief executive officer of the Markham, Ont.-based company, said in a news release.

The Markit CDX North American Investment Grade 33 index headed out modestly tighter on the day at a spread of 55 basis points.

In the secondary market, bank paper was mostly tighter.

Bank of America Corp.’s $4 billion of fixed-to-floating rate senior notes (A2/A-/A+) that priced in two tranches on Thursday traded about 1 bp to 4 bps better than issuance.

Bank of New York Mellon’s $750 million of 2.1% senior notes due Oct. 24, 2024 that came in the previous session firmed about 2 bps.

In other new issue trading, Charter Communications, Inc.’s $1.5 billion of 4.8% senior secured notes due March 1, 2050 that priced at the start of the week tightened about 8 bps on the bid side.

Bonds in the telecommunications sector were steady following T-Mobile U.S. Inc.’s Federal Communications Commission approval earlier in the week to acquire Sprint Corp.

AT&T Inc.’s 4.35% notes due March 1, 2029 were mostly unchanged on Friday.

Verizon Communications Inc.’s 3.875% green senior notes due Feb. 8, 2029 headed out about 1 bp tighter.

Bank of America firms

Bank of America’s 2.456% green fixed-to-floaters due Oct. 22, 2025 traded on Friday at 84 bps bid, 81 bps offered, a market source said.

The bank priced $2 billion of the notes on Thursday at par to yield a spread of Treasuries plus 88 bps.

The notes priced tighter than initial talk in the 105 bps spread area.

The notes will reset in Oct. 22, 2024 to a floating rate of Libor plus 87 bps.

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

BNY Mellon improves

Bank of New York Mellon’s 2.1% senior notes due Oct. 24, 2024 (A1/A/AA-) improved to 55 bps bid, 54 bps offered in secondary trading, a market source said.

The bank sold $750 million of the five-year senior notes on Thursday at a spread of Treasuries plus 57 bps.

Bank of New York Mellon is a financial products and services company based in New York.

Charter notes tighten

Charter Communications’ 4.8% senior secured notes due March 1, 2050 (Ba1/BBB-/BBB-) were seen on Friday at 253 bps bid, 248 bps offered, a market source said.

Charter subsidiaries Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. sold $1.5 billion of the notes on Tuesday at a spread of Treasuries plus 260 bps.

Initial price talk was in the Treasuries plus 275 bps area.

The bonds are guaranteed by all of the issuers’ subsidiaries that guarantee the obligations of Charter Communications Operating, LLC under the company’s credit agreement.

Charter is a Stamford, Conn.-based broadband communications company.

AT&T mostly flat

AT&T’s 4.35% notes due March 1, 2029 were mostly unchanged on Friday in the 133 bps bid area, a market source said.

AT&T sold $3 billion of the 10-year notes on Feb. 13, 2019 at a spread of Treasuries plus 170 bps.

The telecommunications company is based in Dallas.

Verizon edges tighter

Verizon Communications’ 3.875% green senior notes due Feb. 8, 2029 firmed about 1 bp in secondary trading on Friday to 99 bps bid, a market source said.

Verizon sold $1 billion of the notes (Baa1/BBB+/A-) on Feb. 5, 2019 at a spread of Treasuries plus 120 bps.

Verizon is a telecommunications company based in New York City.

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