Morning Commentary: Marathon Oil, Constellation, Expedia, bank and SSA supply offered

By Cristal Cody

Tupelo, Miss., April 23 – Supply ramped up early Thursday in the high-grade primary market with corporate and sovereign, supranational and agency bonds set to price during the session, market sources said.

Several corporate issuers are planning offerings with dual and multiple tranches.

Marathon Oil Corp. is offering three tranches of senior notes (Baa2/BBB/BBB) on Thursday. The registered deal includes three-, five- and 10-year notes all initially talked to price with a spread in the Treasuries plus 500 basis points area.

Constellation Brands, Inc. plans to bring two tranches of 10- and 30-year senior notes (Baa3/BBB) to the primary market. Initial price talk on the five-year notes is in the Treasuries plus 285 bps area, while the 10-year tranche is talked at the 305 bps spread area.

Expedia Inc. (Baa3/BBB-/BBB-) is marketing $2 billion of five-year notes in two tranches in a Rule 144A and Regulation S deal. The deal features a bullet tranche coming with initial guidance in the 7% area and a tranche that comes with two years of call protection with initial guidance in the 7.75% area, a trader said.

Wells Fargo & Co. is on deck with a two-part offering of medium-term senior redeemable fixed-to-floating rate notes (A2/A-/A+) that includes six-year notes talked at the 215 bps over Treasuries area and 21-year notes guided to print at the 220 bps spread area.

Additional financial supply also is expected during the session from Morgan Stanley, which is offering six-year fixed-to-floating rate notes (A3/BBB+/A) with price guidance in the Treasuries plus 185 bps area, plus or minus 2 bps.

In addition, First Horizon Bank (Baa3/BBB-) expects to price $300 million of 10-year subordinated notes that are talked at the 6% area. Parent company First Horizon National Corp. held fixed income investor calls on Wednesday.

Meanwhile, Nasdaq, Inc. is on deck with $500 million of 30-year senior notes (Baa2/BBB) that are guided to print in the Treasuries plus 300 bps area.

Also, Travelers Cos., Inc. is marketing $500 million of 30-year senior notes (A2/A/A) that are talked to price in the Treasuries plus 180 bps area.

In SSA primary action, the Bank of England plans to price $2 billion of notes due April 28, 2023 (Aa2/AA/AA) in a Rule 144A and Regulation S offering on Thursday.

Initial price talk was in the Treasuries plus 32 bps area with guidance tightened to Treasuries plus 26 bps.

In addition, Kommuninvest I Sverige AB (Aaa/AAA) intends to price $1 billion of notes due Feb. 2, 2022 in a Rule 144A and Regulation S deal.

Price guidance firmed to mid-swaps plus 15 bps from initial price talk in the mid-swaps plus 20 bps area.

High-grade deal volume thinned on Wednesday with issuance week to date totaling more than $16 billion.

About $40 billion to as much as $60 billion of volume is forecast for the week.

Market tone was improved at the start of Thursday’s session with stock indices and high-grade ETFs on the rise.

The iShares iBoxx Investment Grade Corporate Bond ETF rose 0.42% to 129.99.

The Pimco Investment Grade Corporate Bond Index ETF was up 0.6% at 110.53 over the morning.

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