Harris prices notes; heavy supply forecast; Chevron sets calls; Highwoods, Motorola firm

By Cristal Cody

Tupelo, Miss., Feb. 23 – Harris Corp. tapped the high-grade market on Friday with $300 million of 12-month floating-rate notes.

Otherwise, activity was mostly light following two strong consecutive sessions of supply.

Deal volume is expected to be heavy in the week ahead.

About $25 billion to $30 billion of supply is forecast by syndicate sources.

Several issuers are in the deal pipeline, according to market sources.

Chevron Phillips Chemical Co. LLC plans to hold fixed-income investor calls in the upcoming week.

New corporate bonds priced during the week were mixed in the secondary market but mostly better, a source said.

Highwoods Realty LP’s $350 million of 4.125% notes due March 15, 2028 (Baa2/BBB/) that priced on Thursday at a spread of Treasuries plus 135 basis points tightened to 130 bps bid, 128 bps offered.

Motorola Solutions, Inc.’s new 4.6% senior notes due Feb. 23, 2028 (/BBB-/BBB-) firmed to 167 bps bid, 164 bps offered in secondary trading, the source said.

Motorola sold $500 million of the notes on Wednesday at a spread of 170 bps over Treasuries.

Elsewhere, credit spreads improved on Friday. The Markit CDX North American Investment Grade 29 index closed more than 1 bp tighter at a spread of 56 bps.

This week saw the “return of inflows,” Yuri Seliger, an analyst with BofA Merrill Lynch, said in a research note released on Friday.

U.S. fund and ETF flows turned positive for both stocks and bonds for the week ended Feb. 21 following outflows a week earlier, according to the note.

High grade had an inflow of $2.71 billion after a $1.52 billion outflow, Seliger said, citing data from EPFR Global and BofA Merrill Lynch Global Research.

Flows were stronger for both short-term high grade to $60 billion from $120 million and outside of short-term to $2.11 billion from $1.65 billion, according to the note. High-grade funds reported inflows of $1.81 billion.

Harris prices at par

Harris priced $300 million of senior floating-rate notes due Feb. 27, 2019 (Baa3/BBB-/BBB) at par to yield Libor plus 47.5 bps in Friday’s offering, according to an FWP filing with the Securities and Exchange Commission.

The bookrunners were Citigroup Global Markets Inc., HSBC Securities (USA) Inc., J.P. Morgan Securities LLC, BofA Merrill Lynch, Scotia Capital (USA) Inc., SunTrust Robinson Humphrey, Inc., U.S. Bancorp Investments, Inc. and Wells Fargo Securities, LLC.

Proceeds will be used with cash on hand to make about $300 million of voluntary contributions to the company’s U.S. benefit pension plans during the remainder of fiscal 2018.

The communications and information company is based in Melbourne, Fla.

Chevron plans calls

Coming up on Monday, Chevron Phillips Chemical (A2/A-/) plans to hold fixed-income investor calls, according to a market source.

J.P. Morgan Securities, Mizuho Securities USA Inc. and MUFG are the arrangers.

The Woodlands, Texas-based petrochemical company is owned by Chevron Corp. and Phillips 66.

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