High-grade primary quiets; light supply for week ahead; Progressive flat; Conagra mixed

By Cristal Cody

Tupelo, Miss., Oct. 19 – The investment-grade primary market stayed quiet on Friday with no reported issuers.

Deal volume fell short of syndicate forecasts for the week as market tone soured and a focus on earnings results resumed, sources said.

More than $14 billion of investment-grade bonds were priced, compared to expectations of about $25 billion to $35 billion of new supply.

About $15 billion to $20 billion of high-grade issuance is forecast for the week ahead, according to market sources.

Elsewhere on Friday, Oglethorpe Power Corp. (Baa1//BBB+) wrapped a two-day round of fixed-income investor calls, a source said. Goldman Sachs & Co. LLC and MUFG were the arrangers.

New investment-grade bonds sold this week were mixed in the secondary market.

Progressive Corp.’s 4% senior notes due March 1, 2029 priced in the previous session were wrapped around issuance on Friday.

Conagra Brands, Inc.’s $7.3 billion of senior notes (Baa3/BBB/BBB-) brought to the primary market in seven tranches on Monday were mixed with the long-dated bonds weaker.

The Markit CDX North American Investment Grade 31 index ended the day mostly unchanged at a spread of 67 basis points.

For the week ended Oct. 17, Lipper US Fund Flows reported inflows of minus $54 million for corporate investment-grade funds.

Outflows shifted to stocks from bonds, according to a BofA Merrill Lynch note released on Friday.

“The selloff in stocks last week followed a substantial increase in interest rates earlier in October,” Yuri Seliger, a BofA Merrill Lynch analyst, said in the note. “Hence after large redemptions from fixed income funds and ETFs in the prior week, this past week stocks were instead hit by outflows.”

Investors withdrew $11.79 billion from equity funds and ETFs in the largest reduction since June after a small $1.87 billion outflow in the prior week, Seliger said.

Outflows in the high-grade bond space, which includes corporates, Treasuries, agencies and mortgages, totaled $950 million, down from a $2.69 billion outflow in the prior week, according to the note.

Inflows to short-term high grade declined to $850 million from $1.49 billion, while outflows outside of short-term dropped to $1.8 billion from $4.18 billion, according to the note.

Investment-grade funds saw an outflow of minus $1.2 billion this week from a minus $300 million outflow in the prior week, Seliger said.

Progressive steady

Progressive’s 4% senior notes due March 1, 2029 traded on Friday at 85 bps bid, 83 bps offered, according to a market source.

The company sold $550 million of the notes due (A2/A/A) on Thursday at a spread of 85 bps over Treasuries.

Progressive is an insurance company based in Mayfield Village, Ohio.

Conagra mixed

Conagra’s 4.85% notes due Nov. 1, 2028 tightened to 168 bps bid, 165 bps offered in secondary trading, a source said.

The $1.3 billion tranche priced on Monday at a spread of 170 bps over Treasuries.

Conagra’s $1 billion of 5.4% bonds due Nov. 1, 2048 softened to 212 bps bid, 209 bps offered.

The notes priced at a Treasuries plus 210 bps spread.

Conagra is a packaged food company based in Chicago.

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