Investment-grade supply pauses on Fed rate decision; Hudson Pacific eyes primary market

By Cristal Cody

Tupelo, Miss., Sept. 18 – High-grade bond issuers stayed on the sidelines on Wednesday as focus turned to the Federal Reserve’s second rate cut of 25 basis points this year.

The Federal Reserve lowered the target range for the Federal Funds rate to 1.75% to 2%.

“This action supports the committee's view that sustained expansion of economic activity, strong labor market conditions, and inflation near the committee's symmetric 2 percent objective are the most likely outcomes,” a Federal Open Market Committee monetary policy statement on Wednesday said.

The Fed trimmed rates for the first time since 2008 at the July 30-31 policy meeting when it lowered the target range for the Federal Funds rate to 2% to 2.25%.

Bond issuance was expected to remain quiet on Wednesday.

Corporate high-grade bond volume week to date totals more than $8 billion.

About $25 billion of supply was expected by syndicate sources for the week.

Coming up in high-grade market activity on Thursday, Hudson Pacific Properties Inc. intends to hold fixed income investor calls.

The Markit CDX North American Investment Grade 32 index closed the day modestly tighter at a spread of 51 bps.

Energy bonds were mixed in secondary trading.

Occidental Petroleum Corp.’s 3.5% notes due Aug. 15, 2029 that priced in August firmed about 3 bps.

Bonds in the telecommunications sector were mixed.

AT&T Inc.’s bonds traded about 2 bps to 3 bps tighter.

Verizon Communications Inc.’s 3.875% green senior notes due Feb. 8, 2029 softened about 2 bps on the day.

New issues brought to the primary market in the first two sessions of the week were seen mostly flat to slightly better than issuance.

FMC Corp.’s $1.5 billion three-tranche offering of senior notes (Baa2/BBB-) that priced on Tuesday firmed about 5 bps to 8 bps, a source said.

The Philadelphia chemicals manufacturer’s $500 million of 3.45% notes due Oct. 1, 2029 tightened about 5 bps to the 160 bps area.

The tranche priced at a spread of Treasuries plus 165 bps, on the tight side of guidance and better than initial talk in the Treasuries plus 190 bps area.

Hudson Pacific active

Hudson Pacific Properties (Baa3/BBB-/BBB-) plans to hold fixed income investor calls on Thursday via BofA Securities, Inc. and Wells Fargo Securities LLC, according to a market source.

Hudson Pacific is a Los Angeles-based real estate investment trust focused on office and media and entertainment properties in California.

Occidental Petroleum firms

Occidental Petroleum’s 3.5% notes due Aug. 15, 2029 (Baa3/A) improved about 3 bps in secondary trading on Wednesday to the 159 bps area, a market source said.

The notes traded at 172 bps bid in August.

The Los Angeles oil and gas, chemical and midstream company sold $1.5 billion of the notes on Aug. 6 at a 185 bps over Treasuries spread.

AT&T edges tighter

AT&T’s 4.35% notes due March 1, 2029 (Baa2/BBB) firmed about 1 bp on Wednesday to the 138 bps area, a market source said.

AT&T sold $3 billion of the 10-year notes on Feb. 13 at a spread of Treasuries plus 170 bps.

The telecommunications company is based in Dallas.

Verizon bonds ease

Verizon Communications’ 3.875% green senior notes due Feb. 8, 2029 eased 2 bps during the session and were seen in the 101 bps area, according to a market source.

Verizon sold $1 billion of the notes (Baa1/BBB+/A-) on Feb. 5 at a spread of Treasuries plus 120 bps.

Verizon is a telecommunications company based in New York City.

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