Primary activity forecast strong for week ahead; Thermo Fisher tightens; Anheuser-Busch eases

By Cristal Cody

Eureka Springs, Ark., May 27 – Investment-grade market action stayed fairly quiet on Friday with most participants headed out early for the three-day holiday weekend.

The bond markets closed at 2 p.m. ET on Friday and will be closed on Monday for the Memorial Day holiday.

Primary activity is expected to be solid in the upcoming short week with as much as $30 billion estimated to price, according to a market source.

High-grade issuers have priced more than $196 billion of bonds so far in May, a new monthly record that surpasses the record $192.14 billion priced in September 2013, a market source reports. Prospect News’ data is slightly different but tells a similar story: $159.90 billion so far in May, beating the previous record of $159.76 billion in March 2015.

The Markit CDX North American Investment Grade index headed out at the market close modestly tighter at a spread of 77 basis points.

Thermo Fisher Scientific Inc.’s 3% notes due 2023 traded 3 bps better on Friday and are trading more than 50 bps tighter than where the bonds priced in April.

Anheuser Busch InBev Finance Inc.’s 3.65% notes due 2026 traded 4 bps to 5 bps weaker over the day.

Wells Fargo Bank NA’s new 1.75% notes due 2019 were quoted nearly 15 bps tighter than where the paper priced on Wednesday earlier in the session.

Thermo Fisher tightens

Thermo Fisher’s 3% notes due 2023 firmed 3 bps to 101 bps bid on Friday, according to a market source.

The company announced Friday that it would acquire FEI Co. for $4.2 billion.

Funding will come from fully committed bridge financing to be replaced by new debt. Thermo Fisher will also use cash on hand for the transaction.

Thermo Fisher Scientific sold
$1 billion of the notes (Baa3/BBB/BBB) on April 4 at a spread of 155 bps over Treasuries.

The science technology company is based in Waltham, Mass.

Anheuser-Busch softens

Anheuser Busch InBev’s 3.65% notes due 2026 headed out 4 bps to 5 bps weaker on Friday at 135 bps bid, a market source said.

The notes had also eased 1 bp on Thursday after being as much as 3 bps softer earlier in that session.

Anheuser Busch InBev’s ratings were dropped to A3 from A2 by Moody’s Investors Service on Wednesday due to what the rating agency said would be the significant debt and high leverage the parent company will incur to complete a $106 billion cash and stock acquisition of SABMiller plc.

Fitch downgraded Anheuser Busch’s ratings to BBB+ from A earlier in the month.

The company sold $11 billion of the notes (A3/A-/BBB+) on Jan. 13 at a spread of Treasuries plus 160 bps.

The brewery is based in Leuven, Belgium.

Wells Fargo firms

Wells Fargo Bank’s 1.75% notes due 2019 were quoted early Friday at 56 bps offered in the secondary market, a source said.

The company sold $1.75 billion of the notes (Aa2/AA-/AA) on Wednesday at a spread of 70 bps over Treasuries.

The Sioux Falls, S.D.-based bank is a subsidiary of Wells Fargo & Co.

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