Citigroup prices $2.5 billion; Flagstar prints; light supply eyed for week ahead; RBC firms

By Cristal Cody

Tupelo, Miss., Oct. 23 – The high-grade primary market saw additional financial paper price on Friday.

Citigroup Inc. sold $2.5 billion of four-year fixed-to-floating-rate social housing bonds (A3/BBB+/A).

In addition, Flagstar Bancorp Inc. (Baa3/BBB/BBB) brought $150 million of 10-year fixed-to-floating-rate subordinated notes to the primary market.

Corporate issuers priced more than $16 billion of bonds over the week with demand remaining strong, outpacing the $15 billion of supply expected, sources said.

Citigroup’s deal joins other bank issuance this week and in the same session a week ago following the release of third quarter earnings reports.

On Oct. 16, Bank of America Corp. brought $8.5 billion of medium-term senior notes (A2/A-/A+) in five tranches, and Morgan Stanley (A2/BBB+/A) sold $1 billion of five-year global medium-term fixed-to-floating-rate senior notes.

Kicking off financial supply this week, Canadian Imperial Bank of Commerce sold $500 million of five-year green senior notes (A2/BBB+/AA-) on Monday.

On Wednesday, Royal Bank of Canada priced $2.25 billion of three-year senior medium-term bail-inable notes (A2/A/AA) in two tranches.

During Thursday’s session, Synovus Bank (Baa2/BBB/BBB) sold $200 million of 10-year fixed-to-floating-rate subordinated notes, while Paccar Financial Corp. (A1/A+/) priced a $100 million add-on to its 1.8% medium-term notes due Feb. 6, 2025.

Looking ahead to next week, syndicate sources predict deal volume will remain light with numerous companies still in earnings-related blackout periods.

About $15 billion of high-grade bond supply is forecast for the week ahead.

In the secondary market, new financial paper has traded mostly better this week, a source said.

Royal Bank of Canada’s 0.5% notes due Oct. 26, 2023 firmed to 31 basis points bid.

The bank sold $1.25 billion of the notes on Thursday at a spread of Treasuries plus 33 bps.

Initial price talk was in the Treasuries plus 50 bps area.

The high-grade space was mostly positive over Friday’s session.

The Markit CDX North American Investment Grade 35 index firmed 0.47 bp to a spread of 56.81 bps.

The PIMCO Investment Grade Corporate Bond index gained 0.10% to 114.69.

The iShares iBoxx Investment Grade Corporate Bond ETF improved 0.25% to 134.62.

Funds, ETF inflows increase

Meanwhile, inflows into U.S. investment-grade bond funds and ETFs rose to $8.89 billion for the past week ended Wednesday from $8.65 billion in the week prior, according to a BofA Securities, Inc. research note released on Friday.

The gain was led by ETF inflows improving to $3.65 billion from $3.39 billion a week ago and by short-term inflows rising to $2.84 billion this week from $2.49 billion in the prior week.

The inflows were partially offset by a decline to $5.24 billion from $5.26 billion for funds inflows and a decline to $6.05 billion this past week from $6.15 billion in the prior week for excluding short-term inflows, according to the report.

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