Morning Commentary: Apple, Hewlett Packard, Unum, Coca-Cola, Anthem notes on tap

By Rebecca Melvin

New York, Sept. 4 – The strong pace of issuance continued in U.S. investment-grade debt early Wednesday with no fewer than 14 deals announced in the first couple hours of the session.

The market reopened on Tuesday following the Labor Day holiday with a record number of issuers hitting the tape. There had not been as heavy a day in terms of numbers of deals for four years.

Apple Inc. and Hewlett Packard Enterprise Co. announced deals early Wednesday. The California-based tech giants are planning multi tranches, with Apple planning to offer up five fixed-rate tranches due in 2022, 2024, 2026, 2029 and 2049, and Hewlett Packard intending to price a two-parter.

The proceeds from Hewlett-Packard’s offerings will be used to repay the company's $1.1 billion 2.1% notes due 2019, to fund the acquisition of Cray Inc. along with the proceeds from an expected offering of asset-backed notes and for general corporate purposes.

The corporate issuer lineup for Wednesday included Chattanooga, Tenn.-based employee benefits provider Unum Group, Coca Cola Co., Anthem Inc., Amphenol Corp., KeyCorp, Simon Property Group LP, MPLX LP, Enable Midstream Partners, LP and Highwoods Realty LP.

The investment-grade bond market is expected to see $120 billion to $130 billion of supply in September, including $35 billion and $45 billion this week as the pace typically accelerates right out the gates after Labor Day, according to a global research note from BofA Merrill Lynch released on Tuesday.

Spreads should rally in September, according to the research note, as “investors relearn that supply will likely not crush the markets.”

September is seasonally the busiest month of the year for supply in the IG market. The change in corporate behavior has shifted issuance away from supporting re-leveraging activities toward refinancing in the currently low-interest-rate environment.

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