Fed leaves interest rates unchanged; primary silent; Kraft Heinz, Burlington Northern firm

By Aleesia Forni and Cristal Cody

Virginia Beach, Sept. 17 – The high-grade bond primary market was quiet on Thursday as the Federal Reserve wrapped up its two-day policy meeting, deciding not to begin raising interest rates in September.

The Fed cited inflation, market volatility and a weak global economy in its decision.

“The committee anticipates that it will be appropriate to raise the target range for the Federal Funds rate when it has seen some further improvement in the labor market and is reasonably confident that inflation will move back to its 2% objective over the medium term,” the post-meeting statement said.

With players focused on the Fed, issuers stayed on the sidelines on Thursday, with no new deals pricing during the session.

This week has seen roughly $8.1 billion of new investment-grade paper price, far short of what was predicted to be around $25 billion to $30 billion of supply.

Investment-grade bonds were mixed in secondary trading, while credit spreads improved over the day.

Kraft Heinz Co.’s 3.95 notes due 2025 tightened about 10 basis points over the session.

Hershey Co.’s 3.2% notes due 2025 were unchanged in secondary trading.

Burlington Northern Santa Fe LLC’s debentures (A3/BBB+) headed out flat to about 3 bps tighter.

HSBC Holdings plc’s 4.25% subordinated notes due 2025 were flat.

The Markit CDX North American Investment Grade index improved 1 bp to a spread of 76 bps on Thursday.

Kraft Heinz tightens

Kraft Heinz’s 3.95% notes due 2025 tightened to 148 bps bid, better than where the bonds traded on Wednesday at 159 bps bid, a market source said.

Heinz sold $2 billion of the notes (Baa3/BBB-) at Treasuries plus 155 bps on June 23 before the company merged with Kraft in July.

The combined food and beverage company is based in Pittsburgh and Northfield, Ill.

Hershey steady

Hershey’s 3.2% notes due 2025 were flat on the day at 86 bps bid in secondary trading, a market source said.

Hershey sold $300 million of the 10-year notes (A1/A) on Aug. 18 at 105 bps over Treasuries.

The chocolate, candy and confectionary product maker is based in Hershey, Pa.

Burlington Northern mixed

Burlington Northern’s 3.65% debentures due 2025 were quoted flat at 138 bps bid, a market source said.

The company sold $350 million of the bonds on Aug. 13 at a spread of Treasuries plus 148 bps.

Burlington Northern’s 4.7% debentures due 2045 firmed 3 bps over the day to 175 bps bid in the secondary market.

The debentures priced in a $650 million tranche in the Aug. 13 offering at Treasuries plus 185 bps.

Burlington Northern Santa Fe is a holding company for railroad transportation subsidiaries based in Fort Worth, Texas.

HSBC unchanged

HSBC’s 4.25% notes due 2025 were seen late Thursday afternoon unchanged at 213 bps bid, according to a market source.

HSBC sold $1.5 billion of the notes (A2/A+) on Aug. 10 at a spread of Treasuries plus 212 bps.

The banking and financial services company is based in London.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.