High-grade quiets after strong back-to-back volume; FHLB on tap; Occidental Petroleum widens

By Cristal Cody

Tupelo, Miss., Aug. 14 – After investment-grade companies tapped the primary market with more than $21 billion of bonds on Monday and Tuesday, supply stayed quiet on Wednesday as stocks tanked.

The S&P 500, Dow Jones industrial average and the Nasdaq all closed down around 3%.

Coming up on Thursday, FHLBank System plans to price new five-year global bonds.

Meanwhile, two issuers are eying possible investment-grade bond offerings.

Assurant Inc. (Baa3/BBB/) on Tuesday completed a two-day round of fixed income investor calls via J.P. Morgan Securities LLC and Wells Fargo Securities LLC.

Also on Tuesday, split-rated issuer Gaming and Leisure Properties, Inc. (Ba1/BB+/BBB-/) held fixed income investor calls for a possible deal that would be run off the high-grade desk, sources report.

BofA Securities, Inc., Fifth Third Securities, Inc., J.P. Morgan Securities and Wells Fargo Securities are the arrangers.

Deal volume has been led this week by Exxon Mobil Corp.’s $7 billion seven-tranche offering of notes on Tuesday.

Investment-grade issuers priced nearly $10 billion of bonds on Tuesday after bringing more than $11 billion of paper to the primary market on Monday.

Supply was predicted to hit the $25 billion to $30 billion area this week with some market sources expecting as much as $40 billion of deal volume.

The Markit CDX North American Investment Grade 32 index widened about 6 basis points on Wednesday to a spread of 63 bps after firming 5 bps in the previous session.

Energy bonds were mostly softer.

Occidental Petroleum Corp.’s senior notes (Baa3/A/) priced as part of a $13 billion 10-part offering a week ago widened about 1 bp to 12 bps over the session.

Duke Energy Carolinas LLC’s $800 million of first and refunding mortgage bonds (Aa2/A/) priced in two tranches on Monday traded wrapped around issuance, a market source said.

The company sold $450 million of 2.45% bonds due Aug. 15, 2029 at a spread of 82 bps over Treasuries and $350 million of 3.2% bonds due Aug. 15, 2049 with a Treasuries plus 110 bps spread.

In other secondary trading, Daimler Finance North America LLC’s $4 billion four-tranche Rule 144A and Regulation S sale of senior notes (A2/A/) priced in four tranches on Monday remain better than issuance, a source said.

Daimler’s $500 million tranche of 3.1% notes due Aug. 15, 2029 were quoted about 8 bps tighter than issuance at 142 bps bid. The notes priced with a spread of 150 bps over Treasuries.

Occidental Petroleum widens

Occidental Petroleum’s 2.9% notes due Aug. 15, 2024 widened 12 bps in the secondary market on Wednesday to 148 bps bid, a market source said.

The notes had tightened 5 bps in the previous session.

Occidental Petroleum sold $3 billion of the notes on Aug. 6 at a 140 bps over Treasuries spread.

The company’s 3.5% notes due Aug. 15, 2029 eased 1 bp on the day to 188 bps bid after widening 6 bps on Tuesday.

The notes priced in the Aug. 6 offering in a $1.5 billion tranche at a Treasuries plus 185 bps spread.

The oil and gas, chemical and midstream company is based in Los Angeles.

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