Lighter pre-holiday high-grade supply eyed; Takeda markets deal; flows rebound; bonds mixed

By Cristal Cody

Tupelo, Miss., June 26 – Investment-grade market action quieted on Friday, capping off a week of about $23 billion of new issuance.

Deal volume is expected to thin to about $10 billion to $15 billion over the upcoming short market week ahead of the Independence Day holiday break, sources report.

In July, syndicate sources expect about $100 billion of issuance for the month as volume begins to normalize following heavy issuance over the past four months.

Takeda Pharmaceutical Co., Ltd. (Baa2/BBB+/) continued marketing on Friday for four tranches of registered dollar-denominated senior notes and euro-denominated bonds, a source said. Marketing began Thursday for the dollar-denominated 10-, 20-, 30- and 40-year tranches with pricing anticipated in the week ahead.

Equitable Holdings, Inc. subsidiary Equitable Financial Life Insurance Co. (A2/A+) also remains in the deal pipeline after the company held fixed income investor calls on Wednesday for an inaugural offering of notes.

Elsewhere, investment-grade bond fund and ETF inflows posted the second highest total on record for the past week ended Wednesday, according to a BofA Securities, Inc. research note released on Friday.

Flows rebounded to $12.83 billion from $5.98 billion a week earlier.

“The improvement in IG inflows was broad-based,” the analysts said.

ETF inflows rose to $6.6 billion from $3.8 billion in the previous week, and fund inflows climbed to $6.23 billion from $2.81 billion a week earlier.

Short-term inflows increased to $5.28 billion this past week from $1.58 billion, while excluding short-term inflows rose to $7.56 billion from $4.4 billion in the previous week.

Investment-grade credit spreads eased about 3 basis points on Friday. The Markit CDX North American Investment Grade 33 index headed out at a spread of 80.99 bps.

In the secondary market, new issues priced this week were improving, sources note.

Intuit Inc.’s $2 billion four-part offering of fixed-rate notes (A3/A-/) priced Thursday with an overall final book demand of more than $10 billion and 40 bps tighter than initial talk firmed about 4 bps to 5 bps.

The company’s tranche of 1.65% notes due July 15, 2030 traded at 96 bps bid.

Intuit sold $500 million of the 10-year notes at a spread of 100 bps over Treasuries.

Initial talk was at the 140 bps spread area.

Xylem Inc.’s $1 billion two-part offering of green senior notes (Baa2/BBB/BBB) traded about 5 bps to 7 bps better better than issuance.

The company sold $500 million of 1.95% notes due Jan. 30, 2028 on Wednesday at a spread of 150 bps over Treasuries. Initial talk was in the Treasuries plus 175 bps area.

Xylem priced $500 million of 2.25% notes due Jan. 30, 2031 at Treasuries plus 165 bps, compared to initial guidance at the 190 bps over Treasuries area.

Pacific Gas and Electric Co.’s first mortgage bonds (Baa3/BBB-/BBB-) priced as part of an $8,925,000,000 six-tranche offering on June 16 were mixed in the secondary market, a source said.

Pacific Gas’ $1 billion tranche of 2.1% bonds due Aug. 1, 2027 were seen with a 98 handle over Friday’s session.

The notes priced at 99.81 to yield 2.13%, or a spread of Treasuries plus 155 bps.

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