Morning Commentary: NextEra plans return; Texas Instruments on tap; Leggett & Platt eyed

By Cristal Cody

Tupelo, Miss., March 1 – For a second consecutive Friday, investment-grade pricing action is expected during the session.

NextEra Energy Capital Holdings Inc. is returning to the primary market with a $400 million offering of guaranteed debentures. The company priced $800 million of fixed- and floating-rate debentures (Baa1/BBB+/A-) on Feb. 22.

Texas Instruments Inc. also announced early Friday it is marketing notes (A1) due 2039.

In other activity on Friday, Leggett & Platt, Inc. (Baa1/BBB) will hold fixed income investor calls for a possible deal, a source said. J.P. Morgan Securities LLC, MUFG, U.S. Bancorp Investments Inc. and Wells Fargo Securities LLC are the arrangers.

More than $23 billion of high-grade bonds have priced week to date, compared to forecasts of about $25 billion to $30 billion of weekly supply.

Looking at March issuance, moderate supply is expected, according to a BofA Merrill Lynch report released on Friday.

“March is usually one of the busiest months for new issue supply, accounting for 11% of annual supply on average since 2010,” BofA Merrill Lynch credit strategist Yunyi Zhang said in the report. “However, with a number of issuers front-loading supply into February given strong market tone, as well as heightened reverse Yankee volumes, we expect this March to be lighter than usual.”

About $100 billion to $120 billion of volume is expected for the month, according to the report.

For the week ended Feb. 27, Lipper US Fund Flows reported inflows climbed to $3.9 billion for corporate investment-grade funds from $1.95 billion in the previous week and $1.89 billion in the prior week.

The week saw “another big inflow to high grade,” Yuri Seliger, an analyst with BofA Merrill Lynch, said in a research report released Friday.

Inflows to U.S. high-grade mutual funds and ETFs jumped to $5.01 billion for the week ended Wednesday, up from a $990 million inflow a week earlier.

The jump followed a $6.51 billion inflow in the first week of February that was the fourth largest on record, Seliger said.

“This past week, the increase in buying of high grade was about equally split between short-term and [excluding] short-term,” Seliger said.

Short-term buying rose to $2.7 billion for the past week from $710 million in the previous week, while ETF inflows rose to $1.47 billion from $1.12 billion a week earlier.

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