Regeneron sells $2 billion notes; steady supply expected; fund, ETF inflows rise

By Cristal Cody

Tupelo, Miss., Aug. 7 – The high-grade primary market stayed active on Friday with a two-part offering from Regeneron Pharmaceuticals, Inc.

Regeneron Pharmaceuticals sold $2 billion of fixed-rate senior notes (Baa3/BBB+) with both tranches pricing 20 basis points tighter than initial guidance.

Also on Friday, Standard Industries Inc. priced a $1.1 billion split-rated offering of senior notes due Jan. 15, 2031 (Ba2/BBB-) in a Rule 144A and Regulation S deal.

Investment-grade issuers have kept primary action strong over the week with about $36 billion of supply, beating forecasts of about $25 billion to $35 billion of issuance for the week.

Deal volume is expected to remain steady in the week ahead with syndicate forecasts of about $25 billion to $30 billion of supply anticipated.

Meanwhile, overall investment-grade bond fund and ETF inflows rose to $10.14 billion for the past week ended Wednesday from $9.03 billion in the prior week, according to a BofA Securities, Inc. research note released Friday.

High-grade “inflows were broad-based” with ETF inflows down to $2.68 billion from $3.61 billion, funds up at $7.46 billion from $5.42 billion, short-term inflows softer at $3.19 billion from $3.28 billion and excluding short-term inflows higher at $6.95 billion from $5.76 billion in the prior week, according to the report.

Elsewhere, the Labor Department announced improvements in the labor market with total nonfarm payroll employment up by 1.8 million in July. The unemployment rate fell to 10.2% from 11.1% in June.

Analysts expected a 1.48 million jobs gain and a 10.6% unemployment rate.

The data was better than forecast “and provides further evidence that the recession will likely be short-lived,” Confluence Investment Management LLC strategists said in a note on Friday.

Prologis improves

The Markit CDX North American Investment Grade 33 index ended the day modestly weaker at a spread of 65.03 basis points.

The Pimco Investment Grade Corporate Bond Index softened 0.18% on the day to 117.50.

The iShares iBoxx Investment Grade Corporate Bond ETF declined 0.28% to 138.76.

In secondary trading, new issues were mixed, according to market sources.

Prologis, LP’s $1.25 billion of fixed-rate notes (A3/A-A-) priced in two tranches on Thursday firmed about 2 bps to 3 bps.

The company’s tranche of 1.25% green notes due Oct. 15, 2030 tightened to 73 bps bid.

Prologis sold $750 million of the notes at a spread of 75 bps over Treasuries.

Initial price talk was in the 105 bps spread area.

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