Morning Commentary: American Water, PSE&G, ConEd offer bonds; M&A funding deals eyed

By Cristal Cody

Tupelo, Miss., May 6 – A handful of issuers moved ahead early Monday with plans to tap the high-grade bond market.

American Water Capital Corp. is marketing two tranches of 10- and 30-year senior notes.

Public Service Electric and Gas Co. is offering 10- and 30-year secured medium-term notes.

In addition, Consolidated Edison Co. of New York, Inc. intends to price new fixed-rate debentures.

The deals are all registered with the Securities and Exchange Commission.

Heavy volume is expected this week with the bulk of supply from an eight-part Rule 144A and Regulation S offering eyed to price early in the week from Bristol-Myers Squibb Co., according to market sources.

Bristol-Myers Squibb finished a two-day round of fixed income investor calls on Friday for the deal.

Proceeds will be used to help fund a portion of the funding costs of the company’s acquisition of Celgene Corp.

About $40 billion to $45 billion of new issuance is forecast by syndicate sources for the week.

Meanwhile, T-Mobile U.S. Inc.’s roadshow that started last week for an upcoming bond offering to fund its acquisition of Sprint Corp. continues through Wednesday in the U.S. and Europe markets.

Coming up on Tuesday, Fidelity National Information Services, Inc. will begin a roadshow and fixed investor calls for a multi-currency bond deal to help finance its acquisition of Worldpay Inc. The roadshow will continue through Friday.

“With 75% of high-grade companies having reported 1Q19 earnings by now, the calendar should pick up going forward,” according to a BofA Merrill Lynch research note released on Monday.

The week of May 6 typically has $36 billion of average new issuance historically, according to the report.

Last week, high-grade issuers priced more than $23 billion of bonds, beating market forecasts of about $15 billion to $20 billion of supply.

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