Morning Commentary: Bank of America, BMO, Equifax, Howmet on tap; VF notes improve

By Cristal Cody

Tupelo, Miss., April 22 – A handful of bond deals are expected to price in the high-grade primary market on Wednesday, including new bank supply, sources report.

Bank of America Corp. is marketing 11-year medium-term fixed-to-floating rate senior notes (A2/A-/A+) with initial price talk at the Treasuries plus 225 basis points area.

Also, Bank of Montreal (Aa2/A+/AA-) is offering dollar-denominated five-year senior medium-term notes on Wednesday. Initial price talk is in the Treasuries plus 175 bps area.

Meanwhile, Equifax Inc. is on deck with a two-tranche offering of senior notes (Baa2/BBB) that includes five-year notes talked to print with a spread in the 275 bps over Treasuries area and 10-year notes talked at the 300 bps spread area.

Also, Howmet Aerospace Inc. plans to price $1 billion of split-rated five-year senior notes (Ba3/BBB-/BBB-) that are initially talked to price in the 7.75% area.

Investment-grade volume totals $9.42 billion week to date as supply slows from the record volumes seen throughout March and the first week of April.

About $40 billion to as much as $60 billion of issuance was expected by market participants for the week.

New issues are trading flat to modestly better than issuance, a market source said.

VF Corp.’s $3 billion of senior notes (A3/A) that priced in four tranches on Tuesday improved about 8 bps across all four tranches.

The company sold $1 billion of 2.05% notes due April 23, 2022 at a spread of 185 bps over Treasuries. Initial talk was in the 195 bps area.

VF priced $750 million of 2.4% notes due April 23, 2025 at a Treasuries plus 210 bps spread.

The five-year notes were talked at the 220 bps spread area.

A $500 million tranche of 2.8% notes due April 23, 2027 priced at a spread of 235 bps over Treasuries, compared to initial guidance in the 250 bps over Treasuries area.

VF also sold $750 million of 2.95% notes due April 23, 2030 at a Treasuries plus 240 bps spread.

The 10-year notes were initially talked to print at the 255 bps spread area.

Secondary market volume totaled $23.69 billion on Tuesday, up from $21.69 billion on Monday, Trace data shows.

Market tone was mixed over the morning with stocks gaining.

The Pimco Investment Grade Corporate Bond Index ETF was down 0.42% to 109.69 at the start of the session.

The iShares iBoxx Investment Grade Corporate Bond ETF edged 0.06% lower to 129.28 early Wednesday.

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