Morning Commentary: VF, Hyatt, Kroger, Micron offer new bonds; Jefferies plans add-on

By Cristal Cody

Tupelo, Miss., April 21 – Five corporate high-grade issuers moved forward with plans to tap the primary market on Tuesday, market sources report.

VF Corp., which announced it drew down $1 billion from its senior revolving credit facility on March 23 and announced earlier in April that it will draw down the remaining $1 billion remaining on the facility, is coming to the primary market with four tranches of fixed-rate notes (A3/A) on Tuesday.

Following the drawdowns, VF said on April 7 that it has $2.4 billion of cash on hand.

Proceeds from the bond offering will be used to repay borrowings under the credit facility.

VF’s deal includes two-year notes with initial price talk in the Treasuries plus 195 basis points area, five-year notes talked at the 220 bps spread area, seven-year notes guided to print in the 250 bps over Treasuries area and 10-year notes initially talked at the 255 bps spread area.

Hyatt Hotels Corp. is offering $800 million of senior notes (Baa3/BBB-) in two tranches during the session. A $400 million tranche of five-year notes is talked at the 5.875% area, while a $400 million offering of 10-year notes is talked at the 6.25% area.

Meanwhile, Jefferies Group LLC (Baa2/BBB/BBB) plans to price a $100 million add-on to its $600 million outstanding of 5.125% senior notes due Jan. 20, 2023 that were first priced on Jan. 15, 2013 at 99.721 to yield 5.161%, or a spread of 332.5 bps.

Also, Kroger Co. is marketing $500 million of 10-year senior notes (Baa1/BBB) that are initially talked to price in the Treasuries plus 215 bps area.

In addition, Micron Technology, Inc. intends to sell new three-year senior notes (Baa3/BB+/BBB-) on Tuesday. Initial guidance is in the Treasuries plus 300 bps area.

Investment-grade companies priced $3.65 billion of bonds on Monday.

A Rule 144A and Regulation S offering of dollar-denominated 40-year fixed-to-floating rate notes from Nationwide Mutual Insurance Co. was postponed due to market conditions on Monday and remains in the deal pipeline.

About $40 billion to as much as $60 billion of issuance is expected by market participants this week.

Market tone soured on Monday as the prices of crude oil went into negative territory, while some states announced plans to reopen amid the rise in coronavirus infections in the United States.

Stocks indices were down 1.98% to 2.85% early Tuesday.

The Pimco Investment Grade Corporate Bond Index ETF declined 0.38% to 109.73 as the markets opened.

The iShares iBoxx Investment Grade Corporate Bond ETF fell 0.59% at 129.06 over the morning.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.