Magellan Midstream, Consumers Energy, Freddie Mac tap primary; high-grade credit spreads ease

By Cristal Cody

Tupelo, Miss., Dec. 2 – Investment-grade deal volume slowed Wednesday with just a handful of reported issuers, while others are gauging the primary market with fixed income investor calls, sources report.

Magellan Midstream Partners, LP priced a $300 million reopening of its 3.95% senior notes due March 1, 2050 (Baa1/BBB+) at a spread of 170 basis points over Treasuries, 2 bps tighter than where the notes first priced in a $500 million offering on Aug. 8, 2019.

Consumers Energy Co. sold $300 million of three-year first mortgage bonds due June 1, 2023 (Aa3/A/A+) at a spread of Treasuries plus 20 bps on Wednesday.

In other pricing action, Selective Insurance Group, Inc. (Baa2/BBB/A-) sold $200 million of $25-par perpetual non-cumulative preferred stock (Ba1/BB+/BBB-) following fixed income investor calls on Tuesday.

Also on Wednesday, Freddie Mac priced $3 billion of new three-year Reference Notes at a spread of 6.5 bps over Treasuries, 0.5 bp tighter than where the issuer priced its Reference Notes due Oct. 16, 2023 on Nov. 3.

Elsewhere on Wednesday, a couple of high-grade companies conducted fixed income investor calls.

Juniper Networks, Inc. (Baa2/BBB/) held investor calls for a possible bond offering.

Also, Qualcomm Inc. (A2/A-) held fixed income investor call updates over the day.

Meanwhile, an investment-grade issuer was sent to the junk market on Wednesday.

Seagate Technology plc subsidiary Seagate HDD Cayman plans to price $1 billion of senior notes (Ba1/BB+/BB+) in two tranches in a Rule 144A and Regulation S offering on Thursday, a source said.

The company was dropped to junk on Wednesday by Moody’s Investors Service and Fitch Ratings. Moody’s said its downgrade was prompted by the $1 billion bond offering.

High-grade corporate deal volume totals more than $13 billion week to date following $5.5 billion of supply on Monday and $7.35 billion of issuance on Tuesday. Sovereign, supranational and agency bond supply week to date includes $1.5 billion of notes sold on Tuesday.

About $15 billion to $20 billion of corporate supply is expected by market participants for the week.

Owl Rock tightens

High-grade secondary market volume has been strong week to date with new issues trading mostly tighter, sources note.

Secondary volume included $26.22 billion of bonds traded on Tuesday, down slightly from the $28.97 billion of volume on Monday, according to Trace.

Owl Rock Capital Corp.’s upsized $1 billion of 3.4% senior notes due July 15, 2026 (Baa3/BBB-/BBB-) that priced on Tuesday firmed to 301 bps bid in the secondary market.

The notes, upsized from an initial $400 million offering, priced at a spread of Treasuries plus 320 bps.

Price talk was in the Treasuries plus 350 bps area.

Market tone in the high-grade space was mixed over the day.

Credit spreads eased more than 1 bp during the session.

The Markit CDX North American Investment Grade 35 index softened to a spread of 50.32 bps from 49.28 bps in the prior session.

The PIMCO Investment Grade Corporate Bond index closed up 0.26% at $116.79.

The iShares iBoxx Investment Grade Corporate Bond ETF declined 0.33% to $137.22.

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