Morning Commentary: Costco, Camden, European Investment Bank on tap; JPMorgan, GE firm

By Cristal Cody

Tupelo, Miss., April 16 – A few deals are expected to print in the high-grade primary market on Thursday.

Costco Wholesale Corp. is offering three tranches of senior notes (Aa3/A+) that include seven-, 10- and 12-year issues.

Camden Property Trust also intends to price new fixed-rate notes (A3/A-/A-) on Thursday.

In sovereign, supranational and agency primary action, the European Investment Bank (Aaa/AAA/AAA) intends to price $3 billion of global notes due July 25, 2025, according to a market source.

Initial price talk is in the mid-swaps plus 27 basis points area.

Financial supply was anticipated this week following the release of first-quarter earnings reports.

Bank of America Corp., Goldman Sachs Group Inc. and U.S. Bancorp. released results on Wednesday. On Thursday, Bank of New York Mellon Corp. and Morgan Stanley are among a slew of companies posting profit reports.

JPMorgan Chase & Co.’s record $10 billion four-part offering of fixed-to-floating rate notes (A2/A-/AA-) that priced on Wednesday a day after releasing earnings improved about 5 bps to 11 bps in the secondary market, a source said.

The financial services company’s 2.083% notes due April 22, 2026 improved 7 bps after pricing in a $3.5 billion tranche at par to yield a spread of Treasuries plus 175 bps, tighter than talk in the Treasuries plus 185 bps area.

The rate on the notes will reset April 22, 2025 to a floating rate of SOFR plus 185 bps.

Meanwhile, General Electric Co.’s $6 billion of senior notes (Baa1/BBB+/BBB) sold in four parts on Monday have come in about 22 bps to more than 45 bps in secondary trading, a source said.

The company’s 3.45% notes due May 1, 2027 were last seen nearly 50 bps tighter at 238 bps.

The Fairfield, Conn.-based industrial manufacturer sold $1 billion of the notes at 99.845 to yield 3.475%, or a spread of Treasuries plus 285 bps.

The notes were initially talked to price in the Treasuries plus 375 bps area.

Overall secondary corporate volume has been strong this week with $28.82 billion of bonds traded on Wednesday, $30.75 billion on Tuesday and $20.88 billion on Monday, according to Trace data.

Meanwhile, the Federal Reserve announced Thursday that its Paycheck Protection Program Liquidity Facility is now fully operational to help support small businesses impacted from the coronavirus-related lockdowns in place across most of the country.

The program is managed by the Federal Reserve Bank of Minneapolis on behalf of the Federal Reserve System.

Stocks were mixed with only the Nasdaq positive over the morning.

The iShares iBoxx Investment Grade Corporate Bond ETF was down 0.09% at 130.66 at the start of the day after closing Wednesday 0.67% better.

The Pimco Investment Grade Corporate Bond Index ETF opened 0.06% lower at 110.35. The ETF ended Wednesday up 0.41%.

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