Morning Commentary: Lam, Ryder, Atmos Energy, Store Capital, PacifiCorp, RPM on tap

By Cristal Cody

Tupelo, Miss., Feb. 25 – Seven investment-grade companies signaled plans early Monday to tap the primary market with dollar-denominated bond deals.

Lam Research Corp. is on deck with a three-tranche offering of senior notes.

Ryder System Inc. plans to sell medium-term notes.

Atmos Energy Corp. is offering 30-year senior notes.

Store Capital is selling 10-year senior notes.

Berkshire Hathaway Energy Co. subsidiary PacifiCorp intends to price two tranches of first mortgage bonds.

RPM International Inc. plans to price 10-year notes.

Regency Centers, LP intends to bring guaranteed notes to the primary market.

A deal also is eyed in the near horizon from Woodside Finance Ltd., which wrapped a two-day roadshow and fixed income investor calls on Friday for a dollar-denominated offering of notes.

About $25 billion to $30 billion of investment-grade issuance is expected by market sources this week.

Volume was strong last week with more than $27 billion of supply, compared to the $20 billion to $25 billion of issuance expected.

The surge in issuance by Thursday pushed high-grade volume year to date to surpass last year’s pace for both corporate and sovereign, supranational and agency, sources report. More than $190 billion of high-grade corporate bonds have priced this year, while including SSA supply, volume totals about $258 billion year to date, one source said.

By Friday, with two more bond deals priced, corporate volume is now ahead by 1%, according to a BofA Merrill Lynch report released on Monday.

“The busy calendar in February reflects in part catching up after a couple of weak months in December and January, and also some front loading of activity that would have come in March (suggesting downside risk to volumes for that month),” the report said. “Despite a busy February, new issue performance has been stellar, with almost non-existent concessions and decent tightening on the break among the strongest we have seen on record.”

Meanwhile, several issuers including Medtronic plc have priced reverse Yankee bonds year to date, sources report. Coca-Cola Co. on Monday launched a four-part offering of euro-denominated notes. In January, high-grade issuers priced $11.1 billion of euro-denominated reverse Yankee bonds, while more than $5 billion have been priced in February, according to a BofA Merrill Lynch report.

In other activity, secondary trading volume was strong on Friday with $21.03 billion of high-grade corporate bonds traded, compared to $17.54 billion of volume in the same period a week ago, according to Trace data.

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