Paccar prices; front-loaded supply eyed ahead of Fed decision; AEP, Experian, Charter firm

By Cristal Cody

Tupelo, Miss., Dec. 6 – Paccar Financial Corp. tapped the investment-grade bond market on Friday with a $150 million offering of three-year floating-rate notes in an otherwise quiet session.

Investment-grade supply totaled more than $15 billion for the week, in line with forecasts of about $15 billion to $20 of issuance.

The market was quiet at the start of the day as focus swung to the Labor Department’s strong November jobs report.

During the month, employment rose by 266,000, while the the jobless rate was little changed at 3.5%.

Market analysts had expected 180,000 jobs to be added in November and an unemployment rate of 3.6%.

The week ahead features a rate decision by the Federal Reserve on Wednesday with issuance likely to be front-loaded, syndicate sources said.

About $5 billion to $10 billion of supply is expected in the upcoming week with little primary action anticipated for the remainder of the year.

The Markit CDX North American Investment Grade 33 index firmed about 1 basis point to head out on Friday at a spread of 49 bps.

In the secondary market, new bonds traded mostly better than issuance, sources reported.

AEP Texas Inc.’s 3.45% senior notes due Jan. 15, 2050 have firmed about 10 bps.

Experian Finance plc’s 2.75% senior notes due March 8, 2030 traded on Friday about 6 bps tighter than where the issue priced Tuesday.

Charter Communications, Inc.’s 4.8% senior secured notes due March 1, 2050 reopened on Monday remained about 4 bps better than issuance ahead of the weekend.

Paccar sells floaters

Paccar Financial (A1/A+/) priced $150 million of medium-term floating-rate notes due Dec. 16, 2022 at par to yield Libor plus 40 bps on Friday, according to an FWP filing with the Securities and Exchange Commission.

U.S. Bancorp Investments was the bookrunner.

Paccar Financial is a financing arm of Bellevue, Wash.-based Paccar Inc.

AEP Texas tightens

In the secondary market, AEP Texas’ 3.45% senior notes due Jan. 15, 2050 (Baa1/A-/) traded on Friday in the 120 bps bid, 118 bps offered area, sources said.

AEP Texas sold $450 million of the notes on Tuesday at 99.532 to yield 3.475% and a spread of 130 bps over Treasuries.

The electric company is based in Corpus Christi, Texas.

Experian Finance firms

Experian Finance’s 2.75% senior notes due March 8, 2030 (Baa1/A-/) improved about 1 bp on Friday to trade more than 5 bps better than issuance at 109 bps bid, according to market sources.

Experian sold $750 million of the notes on Tuesday at a spread of 115 bps over Treasuries.

Initial price talk was in the Treasuries plus 130 bps area.

Experian Finance is a subsidiary of Dublin, Ireland consumer credit reporting agency Experian plc.

Charter improves

Charter Communications’ 4.8% senior secured notes due March 1, 2050 (Ba1/BBB-/BBB-) were seen Friday at 236 bps bid, 231 bps offered, a market source said.

The company priced a $1.3 billion tap of the notes on Monday at 101.964 to yield 4.677%, or a spread of Treasuries plus 240 bps. The notes priced tighter than initial talk in the Treasuries plus 255 bps area.

Subsidiaries Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. were the issuers.

Charter originally sold the notes in a $1.5 billion offering on Oct. 15 at 99.436 to yield 4.836% and a spread of Treasuries plus 260 bps. The total outstanding is now $2.8 billion.

The broadband communications company is based in Stamford, Conn.

Fixed income flows slow

Elsewhere, for the past week ended Wednesday, overall inflows to U.S. high-grade funds and ETFs declined to $4.69 billion from $6.62 billion in the previous week and $5.51 billion in the week prior, according to a BofA Securities, Inc. research note released Friday.

Last week, the markets were shortened by the Thanksgiving Day holiday.

The “levels are notably above” the $3.4 billion weekly average year to date, while the cumulative three-week $16.8 billion inflow was the largest since October 2014, Yuri Seliger, a credit strategist with BofA Securities, said in the note.

Overall fixed income inflows “normalized” to $5.63 billion from a high $9.35 billion inflow a week earlier as flows declined for high-grade securities, government bonds and municipal bonds, Seliger said.

Broader inflows to the U.S. high-grade space, including corporate bonds, mortgages, agencies and Treasuries, were up slightly at $3.51 billion for the past week from a $3.39 million inflow in the previous week.

Short-term high-grade inflows declined to $1.15 billion from $1.49 billion in the previous week, while excluding short-term inflows slowed to $3.54 billion from $5.13 billion.

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