Morning Commentary: High-grade primary action quiet at market open; Southwest Gas firms

By Cristal Cody

Tupelo, Miss., May 29 – The investment-grade primary market started off to a slow start with no registered issuers marketing bonds early Wednesday.

High-grade companies priced more than $3 billion of notes on Tuesday, while the secondary market saw $17.75 billion of bonds traded, according to market sources and Trace data.

Deal volume week to date has been led by MasterCard Inc.’s $2 billion two-part sale of fixed-rate notes on Tuesday. The bond markets were closed on Monday for the Memorial Day holiday.

About $10 billion to $15 billion of supply is expected this week, according to syndicate sources.

A dollar-denominated Rule 144A and Regulation S offering of senior notes is in the pipeline from Unibail-Rodamco-Westfield SE, which held fixed income investor calls on Tuesday for the deal.

Market tone was weaker over the morning on trade fears with a risk-off mood enveloping the financial markets and sending Treasury yields lower, a source said. The 10-year Treasury yield was down 3 basis points at 2.23%.

Stocks were weaker across the board with the Dow Jones industrial average down about 152 points, or 0.6%, early Wednesday.

In secondary trading, Southwest Gas Corp.’s 4.15% senior notes due June 1, 2049 (A3/BBB+/A) that priced on Tuesday improved about 3 bps, a source said.

The Las Vegas-based natural gas distributor sold $300 million of the notes at a spread of 145 bps over Treasuries.

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