Boston Properties, D.R. Horton, TCF price; heavy May supply eyed; credit spreads widen

By Cristal Cody

Tupelo, Miss., May 1 – Three high-grade issuers tapped the primary market on Friday, pushing the week’s volume to nearly $90 billion.

In registered offerings on Friday, Boston Properties LP sold $1.25 billion of senior notes due Jan. 30, 2031.

D.R. Horton, Inc. priced $500 million of long five-year senior notes after reporting strong second quarter earnings on Tuesday.

Also during the session, TCF National Bank priced a $150 million section 3(a)(2) exempt offering of 10-year fixed-to-floating-rate subordinated bank notes.

The week’s volume blew past market forecasts of about $40 billion to $50 billion of issuance expected following Boeing Co.’s record $25 billion seven-tranche offering of senior notes priced on Thursday.

Volume year to date already is 82% ahead of the pace set in 2019, according to a BofA Securities, Inc. research note.

Supply hit records in March and April and likely will see another record in May as investor appetite remains strong, market sources said.

About $250 billion to $300 billion of volume is being forecast for May.

In the week ahead, about $60 billion to $75 billion of supply is expected to hit the primary market.

Meanwhile, inflows to U.S. high-grade bond funds and ETFs softened to $3.65 billion for the past week ended Wednesday from $3.89 billion in the prior week, the BofA note reported, citing flows into corporate bonds, agencies, Treasuries and mortgages.

Weaker inflows to ETFs of $1.43 billion from 1.92 billion a week earlier were partially offset by stronger inflows to investment-grade bond funds of $2.22 billion from $1.97 billion, according to the report.

Excluding short-term inflows declined to $3.02 billion from $3.32 billion in the previous week, while inflows to short-term high-grade rose to $630 million this week from $570 million last week.

Market tone was softer on Friday with credit spreads wider, stock indices down more than 2.5% and high-grade ETFs weaker.

The Markit CDX North American Investment Grade 33 index eased about 3.5 basis points to a spread of 90.18 bps.

The iShares iBoxx Investment Grade Corporate Bond ETF closed slightly better from where it was down 0.28% over the morning to a 0.15% decline at 128.34.

The PIMCO Investment Grade Corporate Bond Index was down 0.14% over the morning and closed off 0.36% at 109.42.

High-grade bonds were mixed on Friday, sources said.

AT&T Inc.’s notes traded flat to about 10 bps wider.

Verizon Communications Inc.’s senior notes (Baa1/BBB+/A-) were seen unchanged to about 15 bps weaker on the day.

Paper from T-Mobile U.S. Inc. subsidiary T-Mobile USA, Inc. that priced in a $19 billion five-part offering of senior secured notes (Baa3/BBB-/BBB-) on April 2 was softer on Friday.

T-Mobile’s 3.875% notes due April 15, 2030 softened to 108.78 in heavy trading from 109.58 on Thursday.

The $7 billion tranche of 10-year notes priced at 99.28 to yield 3.96% and a Treasuries plus 337.5 bps spread.

Boston Properties prices

Boston Properties sold $1.25 billion of 3.25% senior notes due Jan. 30, 2031 (Baa1/A-/) on Friday at 99.85 to yield 3.267%, or a spread of Treasuries plus 262.5 bps, according to a market source and an FWP filing with the Securities and Exchange Commission.

Initial price talk was in the Treasuries plus 300 bps area.

Bookrunners were BofA Securities, Inc., Deutsche Bank Securities Inc., J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, BNY Mellon Capital Markets, LLC, Citigroup Global Markets Inc., Jefferies LLC, Scotia Capital (USA) Inc., SunTrust Robinson Humphrey, Inc., TD Securities (USA) LLC, U.S. Bancorp Investments, Inc. and Wells Fargo Securities, LLC.

Boston-based Boston Properties is the operating subsidiary of real estate investment trust Boston Properties, Inc.

D.R. Horton sells $500 million

D.R. Horton came with $500 million of 2.6% senior notes due Oct. 15, 2025 (Baa2/BBB/BBB) at a spread of Treasuries plus 225 bps, versus talk in the Treasuries plus 287.5 bps area, according to a market source and an FWP filing.

The notes priced at 99.885 to yield 2.623%.

J.P. Morgan, Mizuho Securities USA Inc., U.S. Bancorp, Citigroup and Wells Fargo were the bookrunners.

The homebuilding company is based in Arlington, Texas.

TCF National Bank prints

TCF National Bank priced $150 million of 5.5% 10-year fixed-to-floating-rate subordinated bank notes (Baa2/BBB-/) in the offering on Friday, according to a market source.

Initial price talk was in the 5.5% area.

The coupon will reset to Libor plus 509 bps after the initial fixed-rate period.

Morgan Stanley and U.S. Bancorp were the bookrunners.

Wayzata, Minn.-based TCF National Bank is a bank and financial services subsidiary of TCF Financial Corp.

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