Morning Commentary: Disney, Northrop Grumman, UPS, Citigroup, MetLife notes on tap

By Cristal Cody

Tupelo, Miss., March 19 – As stocks turned back into positive territory on increased economic action plans by the U.S. government in response to the coronavirus, several investment-grade issuers kicked off bond offerings early Thursday, sources report.

Walt Disney Co. plans to price five tranches of notes.

The deal includes five-, seven- and 10-year notes talked to price at the Treasuries plus 285 basis points area, 20-year notes with initial price talk in the Treasuries plus 290 bps area and 30-year notes talked to come with a 300 bps over Treasuries area spread.

Northrop Grumman Corp. is offering three tranches of senior notes.

The company expects to price 10-year notes with initial price talk in the Treasuries plus 350 bps area, 20-year notes talked to print in the Treasuries plus 350 bps to 362.5 bps area and 30-year notes guided to print at the 362.5 bps to 375 bps over Treasuries area.

United Parcel Service, Inc. is on deck with four tranches of senior notes.

UPS is offering five-year notes that are talked to price at the Treasuries plus 350 bps area, 10-year notes initially talked to price in the Treasuries plus 360 bps area, 20-year notes with initial guidance in the 360 bps spread area and 30-year bonds talked to price in the Treasuries plus 370 bps area.

Citigroup Inc. is marketing fixed-to-floating rate senior notes due March 26, 2041 over the morning. Initial price talk is in the Treasuries plus 350 bps area.

MetLife, Inc. also is offering new 10-year senior notes. Initial price talk is in the Treasuries plus 350 bps to 362.5 bps area.

So far this week, supply has been seen only on Tuesday when issuers priced more than $27 billion of bonds.

Equities gained modestly over the morning on Thursday. The S&P 500 index improved 0.34%, while the Dow Jones industrial average gained 0.02% and the Nasdaq climbed 1.99%.

Treasuries resumed a rally that saw yields decline about 3 bps to 18 bps. The benchmark 10-year note yield fell 18 bps to 1.086% early Thursday.

The Federal Reserve released several announcements early Thursday, including the establishment of temporary U.S. dollar liquidity arrangements with foreign banks to lessen strains in global U.S. dollar funding markets.

“These new facilities will support the provision of U.S. dollar liquidity in amounts up to $60 billion each for the Reserve Bank of Australia, the Banco Central do Brasil, the Bank of Korea, the Banco de Mexico, the Monetary Authority of Singapore, and the Sveriges Riksbank and $30 billion each for the Danmarks Nationalbank, the Norges Bank, and the Reserve Bank of New Zealand,” the Federal Reserve said. “These U.S. dollar liquidity arrangements will be in place for at least six months.”

The Federal Reserve also has standing U.S. dollar liquidity swap lines with the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank.

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