Morning Commentary: Citi, Wells Fargo, Stryker, Microchip, Kellogg, Total offer notes

By Cristal Cody

Tupelo, Miss., May 26 – The investment-grade primary market filled up quickly early Tuesday following the long Memorial Day holiday weekend with bank supply and other issuance expected over the session, market sources said.

Citigroup Inc. is offering 11-year fixed-to-floating rate senior notes (A3/BBB+/A) with initial price talk in the Treasuries plus 215 basis points area.

Wells Fargo & Co. plans to price two tranches of medium-term senior redeemable fixed-to-floating rate notes (A2/A-/A+) that include four-year notes talked to price at the Treasuries plus 175 bps area and eight-year notes talked at the 215 bps over Treasuries area.

Also on Tuesday, Swedbank AB (Aa3/A+/A+) is offering dollar-denominated three-year notes.

Initial price talk is in the Treasuries plus 135 bps area.

In addition, bank holding company Hancock Whitney Corp. plans to price $100 million of $25-par 40-year notes on Tuesday. Initial price talk is in the 6.25% to 6.375% area.

Meanwhile, Stryker Corp. is offering three tranches of notes (Baa1/A) over the day.

The deal includes five-year notes talked to print in the 115 bps over Treasuries area, 10-year notes talked at the 155 bps spread area and 30-year notes with initial guidance in the 180 bps spread area.

Applied Materials, Inc. is on deck with two tranches of senior notes (A3/A-). Initial price talk on a 10-year tranche is in the Treasuries plus 150 bps area, while a 30-year tranche is talked at the 175 bps spread area.

Microchip Technology Inc. is offering two tranches of senior notes that include a $1 billion high-grade tranche of long three-year senior secured notes (Baa3//BBB-) talked at the 275 bps to 287.5 bps over Treasuries area and a $1.2 billion high-yield tranche of long five-year senior notes talked at the 4.75% area.

Also on Tuesday, Kellogg Co. is offering $500 million of 10-year senior notes (Baa2/BBB/BBB) with initial guidance in the Treasuries plus 175 bps area.

Interstate Power and Light Co. plans to bring $400 million of 10-year senior debentures (Baa1/A-) that are initially guided to print at the Treasuries plus 205 bps area.

In addition, Total Capital International is offering 30-year guaranteed notes (Aa3/A+) that are talked to price at the 205 bps spread area on Tuesday.

About $25 billion to $30 billion of deal volume is expected this week.

More than $52 billion of investment-grade bonds were brought to the primary market last week, beating market forecasts of about $30 billion to $40 billion of supply.

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