Morning Commentary: Investment-grade primary market quiet; focus on upcoming supply

By Cristal Cody

Tupelo, Miss., April 8 – The high-grade bond market opened on a quiet note on Monday with focus turned toward an upcoming hefty dollar-denominated deal in the emerging markets.

Saudi Arabian Oil Co., which ended a week-long roadshow on Friday, is expected to price about $10 billion to $15 billion of bonds that are being eyed by investment-grade desks, according to market sources.

In the investment-grade market, syndicate sources mostly expect deal volume to remain light this week.

About $15 billion to $20 billion of high-grade supply was forecast for the week, though some market sources are predicting a marked increase in issuance this week with as much as $40 billion of deals forecast.

Supply is forecast to pick up once companies exit earnings blackout reporting periods, according to market sources.

Two issuers are expected to tap the primary market soon after holding fixed income investor calls last week, according to market sources.

Dublin-based global aircraft leasing company SMBC Aviation Capital Ltd. (A-/A-) held global fixed income investor calls on Thursday for a potential bond deal. Citigroup Global Markets Inc., Credit Agricole CIB, Goldman Sachs & Co. LLC, J.P. Morgan Securities plc, RBC Capital Markets, LLC and SMBC Nikko Securities America, Inc. are the arrangers.

DPL Inc. (Ba1/BBB-/BBB-) plans to price an offering of dollar-denominated notes after holding investor calls on Thursday.

Morgan Stanley & Co. LLC and J.P. Morgan Securities LLC are the bookrunners for the offering from the Dayton, Ohio-based electricity provider and subsidiary of AES Corp.

High-grade issuers sold more than $15 billion of bonds in the first week of April, compared to about $20 billion of supply forecast.

The secondary market saw strong trading volume last week with $20.9 billion of investment-grade issues traded on Friday, along with $21.18 billion on Thursday, $24.38 billion on Wednesday, $22.24 billion on Tuesday and $18.33 billion on April 1, according to Trace data.

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