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Morning Commentary: High-grade primary action quiets; new issues gain; Welltower better
By Cristal Cody
Tupelo, Miss., Dec. 12 – Investment-grade bond market activity is winding down with primary action thinning ahead of the end of the year and little activity reported early Thursday.
A deal from Sterling Bancorp is expected after the company launched a $200 million registered offering of 10-year fixed-to-floating rate subordinated notes (expected ratings Kroll: BBB) on Wednesday.
Investment-grade issuers have priced more than $4.5 billion of bonds week to date. Market sources expected volume of about $5 billion to $10 billion for the week.
In the secondary market, new issues were mixed but mostly tighter than issuance.
Steel Dynamics, Inc.’s $1 billion two-part offering of fixed-rate senior notes (Baa3/BBB-/BBB) brought to the primary market on Monday improved another 1 basis point to 2 bps in the previous session, a source said.
The company’s 3.45% notes due April 15, 2030 were quoted 10 bps tighter in the 155 bps area.
Steel Dynamics sold $600 million of the notes on Monday at 99.736 to yield 3.481% and a Treasuries plus 165 bps spread. Price guidance was in the 175 bps spread area, plus or minus 5 bps.
Welltower Inc.’s $500 million of 2.7% green senior notes due Feb. 15, 2027 (Baa1/BBB+/BBB+) that priced on Monday headed out on Wednesday 1 bp tighter and 6 bps better than issuance, a market source said.
The company priced the notes at 99.893 to yield 2.716% and a spread of 95 bps over Treasuries.
Initial talk was in the Treasuries plus 120 bps spread area.
Overall corporate investment-grade secondary market volume rose to $22.77 billion on Wednesday from $21.24 billion on Tuesday and $18.23 billion on Monday, according to Trace data.
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