Morning Commentary: Verizon offers notes; Mid-America Apartments mulls deal; inflows choppy

By Cristal Cody

Tupelo, Miss., May 4 – Verizon Communications Inc. is expected to tap the primary market on Friday in what typically is a quiet deal session.

Supply was heavy on Thursday with nearly $9 billion of corporate bonds priced following thin volume on Tuesday and Wednesday.

In other high-grade market action, Mid-America Apartments, LP (Baa1/BBB+/BBB+) will hold fixed income investor calls on Friday for a possible deal, a source said.

Citigroup Global Markets Inc., J.P. Morgan Securities LLC, U.S. Bancorp Investments Inc. and Wells Fargo Securities LLC are the arrangers.

Mid-America Apartments is a Memphis-based real estate investment trust.

Also on Friday, Amcor Ltd. will continue to hold fixed income investor calls for a 10-year senior note offering.

April jobs data released Friday morning disappointed forecasts. The Labor Department reported 164,000 jobs were added during the month, below the 193,000 increase analysts had forecasted. The unemployment rate edged lower to 3.9% from 4.1% and was below market forecasts of a 4% rate.

High-grade inflows decline

Elsewhere, inflows to U.S. high-grade funds and ETFs totaled $1.63 billion for the week ended May 2, down from $3.33 billion in the prior week but up from an $860 million inflow two weeks ago, according to a BofA Merrill Lynch note released on Friday.

“This illustrates that inflows to high grade remain choppy and are running at a notably slower average pace compared to last year,” BofA Merrill Lynch analyst Yuri Seliger said in the note.

Most of the decline in high grade inflows was outside of short-term, where inflows fell to $640 million from $2.17 billion, according to the note, which cited data from EPFR Global and BofA Merrill Lynch Global Research. BofA Merrill Lynch said it defines its high-grade flows metric as a combination of bonds, corporate bonds and total return funds and ETFs. High-grade bonds include corporate bonds, mortgages, agencies and Treasuries.

Inflows to short-term high grade fell to $990 million for the week from $1.16 billion.

Meanwhile, inflows to high-grade funds increased this past week to $1.49 billion from $850 million, while inflows to high-grade ETFs declined to $140 million from $2.48 billion, Seliger said.

For the week ended May 2, Lipper US Fund Flows reported inflows of $997 million for corporate investment-grade funds, down from reported inflows of $2.01 billion in the previous week.

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