Morning Commentary: Eversource Energy offers notes; December on target to hit deal low

By Cristal Cody

Tupelo, Miss., Dec. 10 – Eversource Energy kicked off a two-part offering of senior notes on Monday in the high-grade primary market.

The Boston-based energy company plans to price notes due Dec. 1, 2023 and notes due April 1, 2029 to repay short-term debt.

Otherwise, supply is expected to remain light this week with syndicate sources predicting up to about $5 billion of issuance.

Just over $4 billion of investment-grade bonds priced last week.

Little, if any, supply is expected over the final two weeks of December.

The first week of the month typically is the strongest deal volume week in December, according to a BofA Merrill Lynch research note released on Monday.

“This means there is not much room to add to this week's low volume for the remainder of the month,” the note said. “This suggests December supply of less than $10 [billion], which would be the lowest supply volume for any month on record going back to 1998.”

Since 1998, the issuance low in the high-grade bond market has been $13 billion of bonds brought to the market in December 1999, according to the report.

Meanwhile, the secondary high-grade market has been active and remained busy on Friday with $19.96 billion of issues traded, according to Trace.

On Friday, high-grade credit tightened initially but closed a “touch wider” as stocks plunged, the BofA Merrill Lynch note said.

The Markit CDX North American Investment Grade 31 index ended Friday about 5 basis points softer on the week at a spread of 81 bps.

While “credit clearly underperformed during the beginning of the week the turning point was sometime on Thursday where the market finally found buyers at wider levels following a strong overnight session,” according to the BofA Merrill Lynch report. “The return of investor buying after the buyers' strike also allowed dealers to reduce inventories significantly especially Thursday but also Friday.”

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