High-grade volume quiet; Bayer, Digital Realty, Antares hold investor calls; AT&T flat

By Cristal Cody

Tupelo, Miss., June 13 – Investment-grade bond issuers stayed to the sidelines on Wednesday with attention focused on the Federal Reserve’s rate hike of 25 basis points during the session.

The Federal Reserve said in a statement the labor market has continued to strengthen since it last met in May, while economic activity and spending has improved.

The Markit CDX North American Investment Grade 30 index ended mostly unchanged at a spread of 64 bps.

Some issuers were marketing possible deals over the day, while more than a dozen issuers are planning bond offerings, sources said.

Bayer AG (Baa1/BBB/A-) started a three-day round of fixed-income investor calls on Wednesday for a potential dollar-denominated Rule 144A and Regulation S offering.

BofA Merrill Lynch, Credit Suisse Securities (USA) LLC, Goldman Sachs & Co. LLC, HSBC Securities (USA) Inc. and J.P. Morgan Securities LLC are the lead arrangers.

Bayer closed last week on its $63 billion acquisition of Monsanto Co.

Also beginning Wednesday, Digital Realty Trust LP (Baa2/BBB/BBB) held fixed-income investor calls, a market source said. BofA Merrill Lynch, J.P. Morgan Securities, SMBC Nikko Securities America, Inc. and U.S. Bancorp Investments Inc. are the arrangers.

The San Francisco-based company owns, acquires, develops and operates data centers.

In addition, Antares Pharma Inc. is holding fixed-income investor calls this week for a potential bond deal, a market source said. The Ewing Township, N.J., pharmaceutical and drug device company filed a copy of an investor presentation in an 8-K filing with the Securities and Exchange Commission on June 5.

Deal action was busy at the start of the week. On Monday, issuers priced more than $6 billion of investment-grade bonds, while more than $6 billion of corporate bonds were sold on Tuesday.

Syndicate sources forecast about $15 billion to $20 billion of supply for the week.

Looking at deal volume year to date, overall supply is down, while Yankee issuance is up, according to a BofA Merrill Lynch note released on Wednesday.

“We are almost done with the first half of 2018 and U.S. high grade supply is currently down 7% compared to the same period last year,” Yuri Seliger, an analyst with BofA Merrill Lynch, said in the report. “With supply from U.S. issuers down 14% – including 19% for industrials – this is not too different from what we expected. On the other hand, Yankee issuer supply surprised to the upside with a 10% increase. This was led by European issuers, where supply is up $28 [billion] or 24%.”

Telecom paper mostly flat

In secondary trading on Wednesday, AT&T Inc. bonds (Baa1/BBB+/A-) were mostly unchanged, a market source said. AT&T received court approval on Tuesday to complete its $85.4 billion cash and stock acquisition of Time Warner Inc. AT&T plans to close the takeover by June 20.

Time Warner’s 2.95% notes due July 15, 2026 (Baa2/BBB/BBB+) were flat on the day at 143 bps bid, according to the market source.

Time Warner sold $800 million of the notes on May 5, 2016 at a spread of Treasuries plus 135 bps.

Bonds in the telecommunications sector overall were steady over the session, the source said.

Comcast Corp. announced after the market closed a $65 billion cash offer to purchase 21st Century Fox’s television and film assets in an effort to outbid Walt Disney Co., which has a $52.4 billion deal already in place to acquire the assets.

Comcast’s high-grade bonds were mostly flat in trading during the session, while Disney’s bonds also headed out mostly unchanged, a source said.

In other secondary trading, bank and financial paper was mixed and headed out about 1 bp tighter to 4 bps softer, the source said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.