Federal Realty Trust, Brookfield sell notes; high-grade inflows top $7 billion; bonds improve

By Cristal Cody

Tupelo, Miss., Oct. 8 – Primary action slowed over Thursday’s session with just two reported high-grade issuers.

Federal Realty Investment Trust priced an upsized $400 million of long five-year green notes (A3/A-/) after the company held fixed income investor calls on Wednesday.

Brookfield Finance Inc. also sold $400 million of $25-par green guaranteed subordinated notes due Oct. 16, 2080 (Baa1/A-/A-) on Thursday following fixed income investor calls in the previous session.

Investment-grade issuers have priced more than $23 billion of corporate and sovereign, supranational and agency bonds week to date, beating market forecasts of about $15 billion to $20 billion of supply for the week.

Looking ahead to the upcoming week, market focus is expected to be on quarterly earnings results from banks including JPMorgan Chase & Co. and Citigroup Inc., along with other corporate debt issuers such as Delta Air Lines Inc., UnitedHealth Group Inc. and Walgreens Boots Alliance Inc.

Inflows more than double

Investment-grade corporate funds inflows jumped to $7.03 billion over the past week ended Wednesday, according to Refinitive Lipper US Fund Flows.

Inflows totaled $2.08 billion in the previous week and $4.16 billion in the week prior.

The Markit CDX North American Investment Grade 35 index firmed more than 1 basis point to close at a spread of 54.78 bps.

The iShares iBoxx Investment Grade Corporate Bond ETF headed out up 0.25% at 134.62.

The PIMCO Investment Grade Corporate Bond Index closed up 0.29% to 114.77.

Berkshire stronger

New issues are trading mostly better than issuance in the secondary market this week, sources said.

Berkshire Hathaway Finance Corp.’s $1.75 billion of 2.85% senior notes due Oct. 15, 2050 (Aa2/AA/A+) that priced at the start of the week are trading with a 102 handle and were quoted in late afternoon trading at 102.36.

Berkshire Hathaway Finance sold $1.75 billion of the 30-year notes at 99.92 to yield 2.854%, or a Treasuries plus 127 bps spread.

Initial price talk was in the 155 bps spread area.

The company’s 1.45% notes due Oct. 15, 2030 were quoted modestly better at 99.95 on Thursday.

Berkshire Hathaway Finance sold $750 million of the 10-year notes at 99.796 to yield 1.472%, or a 70 bps over Treasuries spread.

The notes were talked to print in the 95 bps over Treasuries area.

LyondellBasell Industries NV subsidiary LYB International Finance III, LLC’s $3.9 billion of guaranteed notes (Baa2/BBB-/BBB) that priced in six tranches on Tuesday improved about 4 bps to 5 bps.

The company’s $1 billion tranche of 3.625% notes due April 1, 2051 were last seen 4 bps tighter at 206 bps bid.

LYB priced the issue at 99.707 to yield 3.641% and a spread of Treasuries plus 210 bps.

The notes were guided at the 240 bps spread area.

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