Morning Commentary: High-grade supply quiet; General Mills holds calls; Anheuser-Busch better

By Cristal Cody

Tupelo, Miss., March 28 – Investment-grade primary market action stayed quiet early Wednesday as activity slows ahead of the long holiday weekend.

General Mills, Inc. (Baa2/BBB/BBB+) plans to hold fixed income investor calls during Wednesday’s session, according to a market source.

BofA Merrill Lynch, Goldman Sachs & Co. LLC, Barclays, Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and Morgan Stanley & Co. LLC are the arrangers.

General Mills announced on Feb. 23 that it will acquire premium pet food manufacturer Blue Buffalo Pet Products Inc. for $8 billion, or $40.00 per share, in cash. The Minneapolis-based consumer food products manufacturer said it expects to finance the acquisition with a combination of debt, cash on hand and about $1 billion of equity.

Otherwise, thin deal activity is expected over the remainder of the week, according to market sources.

High-grade issuers priced more than $12 billion of notes on Monday and Tuesday.

Syndicate sources had predicted about $10 billion to $15 billion of total supply for the week.

The bonds markets will close early on Thursday and remain closed on Friday for the Good Friday holiday.

In other activity, Anheuser-Busch InBev Worldwide Inc.’s guaranteed senior notes that priced in a $10 billion six-tranche offering in the previous week traded mostly better at the start of the day, a source said.

The company’s 4% notes due April 13, 2028 climbed to 101.05 over the morning. The notes went out on Tuesday at 100.71.

Anheuser-Busch (A3/A-) sold $2.5 billion of the notes on March 20 at 99.216 to yield 4.096%, or a spread of 120 basis points over Treasuries.

The Leuven, Belgium-based beer brewer’s 4.6% bonds due April 15, 2048 traded up to 102.48 from 101.94 on Tuesday.

Anheuser-Busch priced $2.5 billion of the 30-year bonds at 99.434 to yield 4.635%, or a 150 bps spread over Treasuries.

Overall investment-grade secondary trading was heavy on Tuesday with $24.25 billion of bonds traded, up from $19.42 billion on Monday, according to Trace.

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