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Morning Commentary: High-grade action quiet, earnings in focus; lighter supply eyed
By Cristal Cody
Tupelo, Miss., July 23 – High-grade deal activity stayed fairly quiet at the start of Monday’s session.
Fitch Ratings said in a news release on Monday that it assigned a BBB+ rating to senior notes expected to be issued by Berkshire Hathaway Energy Co. The Des Moines-based holding company majority owned by Berkshire-Hathaway Inc. plans to use the proceeds to reduce short-term debt and for general corporate purposes.
Elsewhere, SMBC Aviation Capital Ltd. (BBB+/A-) has been holding fixed income investor calls since Thursday, according to a market source.
Citigroup Global Markets Inc., Credit Agricole CIB, Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, RBC Capital Markets, LLC and SMBC Nikko Securities America, Inc. are the arrangers.
The Dublin-based global aircraft leasing company was previously in the dollar-denominated primary market on July 12, 2017 with a $500 million offering of notes due July 19, 2022.
About $20 billion to $25 billion of high-grade supply is forecast this week, with some predicting as little as $10 billion of volume, according to syndicate sources.
Last week, more than $33 billion of investment-grade bonds priced with bank and financial supply heavy following the release of second-quarter earnings reports.
This week, 200 issuers are scheduled to release earnings, with industrial supply expected to “return gradually in coming weeks,” BofA Merrill Lynch analysts said in a note released on Monday.
The week on average has seen $21 billion of volume from 2011 through 2017, including $12 billion in industrials and $9 billion in financials, according to the note.
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