Morning Commentary: Valmont plans add-ons; high-grade inflows better; short-term inflows dip

By Cristal Cody

Tupelo, Miss., June 8 – Deal action in the high-grade bond market is expected to continue on Friday with a two-tranche reopening of notes from Valmont Industries, Inc.

Investment-grade issuers already have priced more than $33 billion of high-grade bonds over the week.

Syndicate sources had expected about $25 billion of supply.

For the week ended June 6, Lipper US Fund Flows reported inflows of $1.33 billion for corporate investment-grade funds.

High-grade inflows for the week ended Wednesday “remained relatively lackluster” at $770 million, although above a $520 million inflow from a week earlier, Yuri Seliger, an analyst with BofA Merrill Lynch, said in a note released Friday.

Inflows to short-term high grade declined to $520 million from $1.24 billion, while flows outside of short-term improved to a $250 million inflow from a $720 million outflow, Seliger said, citing data from EPFR Global and BofA Merrill Lynch Global Research. Outflows from high-grade ETFs accelerated to $370 million from $250 million, while inflows to funds improved to $1.14 billion from $770 million, according to the note.

In the secondary market, new bonds sold over the week remain mostly better, a source said.

Telus Corp.’s $750 million of 4.6% notes due Nov. 16, 2048 (Baa1/BBB+/BBB+) that priced on Thursday firmed about 1 basis point.

The Vancouver, B.C.-based telecommunications company sold the notes at a spread of 160 bps over Treasuries.

Secondary trading volume ended Thursday at $18.68 billion, compared to $19.24 billion on Wednesday, $18.3 billion on Tuesday and $16.04 billion on Monday, according to Trace data.

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