High-grade bond supply muted; more bank deals anticipated; fund, ETF inflows slow

By Cristal Cody

Tupelo, Miss., April 14 – Bank earnings took market focus on Friday with first-quarter releases out from JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co.

Next week, Bank of America Corp., Goldman Sachs Group Inc. and Morgan Stanley will report first-quarter earnings results.

High-grade deal volume may be buzzing next week with $30 billion-plus of offerings if the major U.S. banks decide to fund following earnings releases, but if not, issuance could slow to around $10 billion to $15 billion for the week, sources said.

Issuers priced $10.95 billion of corporate bonds this week, in line with about $10 billion to $15 billion of volume expected after the markets reopened following the Good Friday holiday.

Walmart Inc. waited a day before bringing its deal to the primary market after standing down Tuesday ahead of the release of the Consumer Price Index inflation gauge on Wednesday, a source said.

In the secondary market, Walmart’s $5 billion five-part offering of notes (Aa2/AA/AA) that priced Wednesday traded flat on the long end and in the largest tranches to about 3 basis points tighter at the front of the capital structure that featured sizes under $1 billion, a source said.

Walmart’s $750 million tranche of 3.9% notes due 2028 firmed 2 bps to 45 bps offered. The bonds priced at a spread of Treasuries plus 47 bps. Initial talk was at the 75 bps to 80 bps over Treasuries area.

The $1.5 billion tranche of 4.5% notes due 2033 was wrapped around issuance at 70 bps offered. The issue was talked at the Treasuries plus 95 bps to 100 bps area.

Elsewhere, inflows continued into high-grade corporate funds and ETFs but cooled from the prior week.

Corporate inflows decline

Corporate investment-grade funds posted inflows that softened to $1.13 billion over the past week ended Wednesday from $1.79 billion in the prior week, Refinitiv Lipper US Fund Flows reported.

Inflows to U.S. high-grade funds and ETFs also slowed to $1.94 billion for the week ended Wednesday after a $7.3 billion inflow the week prior, according to a BofA Securities research note.

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