Morning Commentary: MasterCard, Lowe’s, Kimberly-Clark, Florida Power, Sweden on tap

By Cristal Cody

Tupelo, Miss., March 24 – The financial markets opened on a positive note on Tuesday with a number of issuers marketing high-grade bonds and with stocks up about 5% to 7% in early trading, sources report.

MasterCard Inc. announced a registered three-part fixed-rate note offering.

Lowe's Cos., Inc. also plans to price three tranches of fixed-rate notes.

Kimberly-Clark Corp. is offering 30-year fixed-rate notes.

In addition, Florida Power & Light Co. plans to bring fixed-rate first mortgage bonds to the primary market.

In the sovereign, supranational and agency market, Fannie Mae announced it will not utilize the session to price Benchmark notes.

Meanwhile, Sweden is marketing the first SSA offering since early March. Sweden plans to price a dollar-denominated offering of notes due March 30, 2022 that are initially talked to price in the mid-swaps plus 45 basis points area.

In other market activity on Tuesday, Raymond James Financial, Inc. (Baa1/BBB+) is holding fixed income investor calls for a possible senior note offering, a source said.

BofA Securities, Inc., Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Raymond James & Associates are the arrangers.

Market tone was improved over the morning following Monday’s steps by the Federal Reserve to shore up the economy, including new credit facilities to purchase corporate bonds, sources said.

U.S. investment-grade corporate bond exchange-traded funds were up over the morning.

The iShares iBoxx Investment Grade Corporate Bond ETF climbed 2.86%.

The Pimco Investment Grade Corporate Bond Index ETF edged up 1 cent, or 0.01%.

Stocks were improving with the S&P 500 index up 5.42% and the Dow Jones industrial average up 6.67% in early trading.

The New York Stock Exchange opened Monday with full virtual trading as a number of states including New York, California, Illinois, Michigan, Ohio and others clamp down on residents’ movements to try to curtail the spread of the coronavirus.

On Monday, issuers sold more than $19 billion of investment-grade bonds.

Up to $70 billion of supply is anticipated for this week after issuers priced more than $61 billion of high-grade bonds last week, according to market sources.

Bonds improve

New issues priced on Monday mostly tightened in the secondary market with paper improving about 2 bps to more than 20 bps, a source said.

General Dynamics Corp.’s $4 billion of guaranteed senior notes (A2/A/A) that priced in five tranches on Monday improved about 15 bps to 27 bps.

The company’s 3.625% notes due April 1, 2030 firmed to the 282 bps bid area.

General Dynamics sold $1 billion of the 10-year notes at 98.947 to yield 3.752% and a Treasuries plus 300 bps spread.

The 10-year tranche was initially talked to price in the Treasuries plus 320 bps to 325 bps area.

In other secondary trading, Walt Disney Co.’s 4.7% medium-term notes due March 23, 2050 (A2/A/A) that priced as part of a $6 billion five-tranche offering on Thursday has soared, a market source said.

The notes climbed more than 6 points in trading on Monday to 113.69 and were up nearly 4 points in early trading on Tuesday at 117.62.

The notes traded at 107.49 on Friday.

Walt Disney sold $1.75 billion of the 30-year notes on Thursday at 99.316 to yield 4.743% and a Treasuries plus 285 bps spread.

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