Morning Commentary: Fluor markets new notes; light issuance volume forecast for August

By Cristal Cody

Tupelo, Miss., Aug. 20 – Fluor Corp. is in the high-grade market on Monday offering new senior notes (A-) following the company’s fixed income investor calls held the previous Wednesday.

The deal is expected to come as $600 million of 10-year notes, according to a ratings report from S&P Global Ratings.

Little primary action is expected this week with many market participants out for summer breaks following more than $29 billion of new issuance in the previous week, sources report.

Only about $5 billion to $10 billion of high-grade supply is forecast for the week, according to market sources.

New issue volumes for the last two weeks before the Labor Day holiday average just $4 billion and $10 billion over the historical period from 2011 to 2017, according to a BofA Merrill Lynch research report released Monday.

Summer deal volumes so far are “running 35% below last year’s pace and dealer inventories are thus very low,” the note said.

This week also includes the Federal Reserve’s annual economic policy symposium in Jackson Hole, Wyo., that starts on Thursday.

Looking ahead to September, syndicate sources predict as little as $100 billion to as much as $150 billion of high-grade issuance for the month ahead.

Elsewhere, investment-grade secondary trading was light on Friday with a total of $10.46 billion of bonds traded, according to Trace.

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