Morning Commentary: Investment-grade spreads firm; Walgreens, ConocoPhillips mixed

By Cristal Cody

Tupelo, Miss., Nov. 10 – High-grade bond market participants prepared for an active day of issuance on Monday in front of the Veterans Day holiday in the United States, market sources said.

Chevron Corp., Eastman Chemical Co. and Altria Group, Inc. are expected to tap the high-grade bond market on Monday.

In the secondary market, Walgreens Boots Alliance Inc.’s short-dated paper from the $8 billion seven-tranche offering of senior notes (Baa2/BBB/) priced on Thursday traded better than the longer-dated issues, a market source said.

ConocoPhillips Co.’s senior notes (A1/A/) brought in a $3 billion four-tranche offering on Thursday traded flat to modestly tighter, according to a market source.

The Markit CDX North American Investment Grade series 23 index was seen slightly tighter early Monday after the index eased 1 basis point to a spread of 66 bps on Friday.

Walgreens mixed

Walgreens’ 2.7% note due 2019 traded about 10 bps tighter than issuance, while the tranche of 3.8% notes due 2024 traded 2 bps weaker, a market source said.

The 2.7% notes due 2019 were quoted at 95 bps offered, and the 3.8% notes due 2024 were seen at 147 bps offered.

The company, a wholly owned subsidiary of Walgreens Co., sold $1.25 billion of the five-year notes at a spread of Treasuries plus 105 bps on Thursday. Walgreens sold $2 billion of the 10-year notes at Treasuries plus 145 bps.

The drugstore chain is based in Deerfield, Ill.

ConocoPhillips flat to tighter

ConocoPhillips’ 3.35% note due 2024 traded 2 bps tighter at 96 bps offered, a market source said.

The company sold $1 billion of the 10-year notes on Thursday at a spread of Treasuries plus 98 bps.

ConocoPhillips’ tranche of 4.3% notes due 2044 were unchanged from issuance at 123 bps offered, a source said.

The company sold $750 million of the bonds at Treasuries plus 123 bps.

ConocoPhillips is an energy company based in Houston.

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