Strong volume forecast after holiday weekend; high-grade inflows dip; Campbell still weak

By Cristal Cody

Tupelo, Miss., Aug. 31 – High-grade issuers stayed out of the primary market on Friday ahead of the long holiday weekend.

The bond markets will be closed on Monday for the Labor Day holiday.

Supply was light over the week with $6.75 billion of bonds priced, including $2.5 billion of corporate issuance.

Market sources had predicted up to about $5 billion of high-grade corporate volume.

For the week ended Aug. 29, Lipper US Fund Flows reported inflows of $2.25 billion, down slightly from $2.68 billion of inflows reported in the prior week.

Looking ahead, deal volume is expected to pick up substantially with $45 billion to $55 billion of new issue supply predicted for the first week of September, according to BofA Merrill Lynch.

The Markit CDX North American Investment Grade 30 index closed modestly softer at a spread of 60 basis points.

Campbell Soup trade quiets

In secondary trading on Friday, Campbell Soup Co.’s notes (Baa2/BBB-/) headed out mostly unchanged but remain much weaker than where they priced earlier in the year, according to a market source.

The notes were more active in the secondary market on Thursday following the company’s announcement that it plans to sell its fresh foods business, among other changes.

Hedge fund investor Third Point LLC is reportedly seeking a sale of the entire company.

Campbell Soup’s 4.15% notes due March 15, 2028 traded flat at 177 bps bid, a source said.

The company sold $1 billion of the notes at a spread of 130 bps over Treasuries on March 12.

Campbell Soup’s 4.8% notes due March 15, 2048 were quoted unchanged at 242 bps bid on Friday.

The $700 million tranche of notes priced as part of a $5.3 billion seven-part deal in the March 12 offering at a Treasuries plus 170 bps spread.

S&P Global Ratings said on Thursday that it lowered the company’s bond ratings to BBB- from BBB because the company would be less diversified from the proposed divestitures with an increased reliance on its soup and beverage businesses.

The convenience foods company is based in Camden, N.J.

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